For investment ideas that can potentially lead to life-changing gains, few sectors are as viable as biotech stocks to make you rich. Fundamentally, the biotechnology sector offers potential therapeutic innovations that could change paradigms for patient care. As a result, the space can provide an enticing home for funds earmarked for speculation.
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Another factor that bolsters biotech stocks is their general insulation from economic cycles. Of course, downturns impact every industry due to the reduced availability of funding or revenue-building opportunities. Still, medical research is of utmost importance to society. Therefore, research and development in the field will likely continue irrespective of outside circumstances.
To be sure, though, that doesn’t mean biotech stocks are immune from headwinds. On the contrary, this sector – especially in the speculative clinical stage – is wildly volatile. More than likely, you’ll lose money than gain it, which is why a cautious approach is necessary.
Still, for the daring, these are analyst-backed biotech stocks to make you rich.
Nkarta (NKTX)
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Specializing in advanced therapies for cancer patients, Nkarta (NASDAQ:NKTX) focuses on the discovery, development, and commercialization of allogeneic, off-the-shelf natural killer (NK) cell solutions. According to the Cleveland Clinic, NK cells are white blood cells that destroy infected and diseased cells. They also represent a type of lymphocyte.
Now, here’s the intriguing part that possibly makes NKTX one of the biotech stocks to make you rich. Per Cleveland Clinic, NK cells command the label “natural” killers because “they can destroy potential threats without prior exposure to a particular pathogen.” That capability contrasts with other lymphocytes that destroy harmful cells because they require previous exposure to the pathogen.
For investors seeking high-return biotech stocks to buy, the main challenge centers on volatility. Since the start of the year, NKTX lost 77% of its equity value. However, in sharp contrast to the market performance, analysts rate NKTX a unanimous strong buy. Their average price target lands at $15.33, implying nearly 1,003% upside potential.
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eFFECTOR Therapeutics (EFTR)
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One of the compelling clinical-stage biotech stocks, eFFECTOR Therapeutics (NASDAQ:EFTR) focuses on developing treatments that target the eukaryotic translation initiation factor 4E (eIF4E) and other nodes in the translation regulation machinery. This process is done to modulate the synthesis of specific disease-driving proteins. Leveraging this technology, eFFECTOR seeks to treat cancers and other serious diseases through precise modulation of specific protein synthesis.
Put another way, eFFECTOR’s pipeline features drugs known as selective translation regulators (STRs). This arena presents great promise in oncology because it may modulate the production of disease-catalyzing proteins within infected cells. As several scientific journals point out, the approach offers a novel, potentially viable way to address cancer.
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As with other biotech stocks to buy with high return potential, investors must absorb high risks. Specifically, eFFECTOR suffers from a mediocre balance sheet and a high tangible book multiple. Also, it’s priced at 60 cents a pop, making it extremely vulnerable to volatility. Still, analysts also peg EFTR as a unanimous strong buy with a $6.85 target, implying 1,042% upside potential.
DURECT (DRRX)
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Perhaps the riskiest idea on this list of incredibly risky biotech stocks to buy for gamblers, DURECT (NASDAQ:DRRX) is a biopharmaceutical company engaged in the research, development, and commercialization of drug delivery platforms. Per its website, Durect specializes in epigenetic regulation, which according to Nature Journal is “the process by which the activity of a particular gene is controlled by the structure of nearby chromatin.”
To break the process down more simply, epigenetics represents modifications in gene expression that don’t involve changes to the underlying DNA sequence. Rather, it’s a form of gene regulation that determines which genes are turned “on” or “off” in particular cells of the body at specific times. If you want to get into the meat of this discussion, this post published by the National Library of Medicine is freely available to you.
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As with other extreme biotech stocks to make you rich, DRRX is incredibly volatile. Also, Gurufocus warns readers that Durect could be a possible value trap. If you’re scared, you probably should be. Nevertheless, analysts rate DRRX a unanimous strong buy with a $29.80 target, implying 1,097% upside.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
