Genomics, or DNA-based medicine, is the biggest investment opportunity of our lifetimes. And investors are taking notice.
Money is flowing into genomics stocks and the broader biotech sector of which genomics are a part. And the industry has moved to satisfy this new demand with a boom in new biotech IPOs.
Last year, 71 biotech companies valued at $50 million or more entered the market through initial public offerings (IPOs), according to Biopharma Dive. And 2021 is more of the same, with 68 offerings meeting the same criteria through the first nine months of the year.
Now, you know me. I’m not opposed to taking a risk when the odds are in my favor. But the key is that I need to see those odds; I need to be comfortable with the numbers. And today, some of the numbers aren’t inspiring confidence.
Before we get into the details, here’s a quick refresher on why I’m so bullish on genomics.
Why Genomics Is the Future of Tech
I realize it’s a bold statement to say genomics is the investing opportunity of a lifetime. We’ve lived through the 1990s internet bubble, the 2010s mobile and social media boom and even the rise of cryptocurrencies like Bitcoin.
But genomics has the potential to be the most disruptive of all of these technologies over the next 20 years. It will redefine medicine … and even far less obvious industries such as computing, data storage and agriculture. The computers of the not-too-distant future will not be able to depend solely on silicon-based chips. It will have to switch to a hybrid system that uses silicon and biochemical systems.
Don’t take it from me if that sounds far-fetched. Microsoft is leading the charge and pouring its resources into the technology.
The trend is in place, and that’s not changing. I don’t see a scenario in which genomics doesn’t radically change the world and disrupt the economy as we know it today. The challenge is in picking the right way to play this trend.
Biotech IPOs Enter the Market at a Breakneck Pace
We’re only in October, and we’re close to seeing a new record for the number of biotech IPOs worth at least $50 million. And we still have nearly three months to go before year-end.
Quantity rarely means quality, and in IPO booms, it’s normal to see marginal players rush to market faster than they probably should have in order to take advantage of investor generosity. These companies strike while the iron is hot.
It seems like that is what’s happening today. Of all the biotech IPOs launched this year, about half are now trading below their offering price, according to Biopharma Dive.
Perhaps it’s pandemic fatigue; investors are “tired” of the medical angle after hearing it nonstop for the past year and a half. Or maybe it’s the fact that many of these companies went public a little too early. Their products weren’t ready for primetime. But the biotech IPO boom isn’t delivering the benefits that investors hoped to see.
Should You Invest in Biotech IPOs?
I’m not going to tell you to shun all IPOs. If you’ve done your research and you believe a new biotech company’s products have promise, then, by all means, go for it.
But remember the old analogy here. Investing in early-stage biotech stocks is a lot like throwing a plate of spaghetti on the wall and seeing what sticks. Most promising therapies never reach viability and end up as one of those spaghetti noodles on the floor.
That’s not a game I feel I can win in most cases, and it’s not one I want to play. But the thing is, I don’t have to.
My Green Zone Ratings system creates a higher bar for IPOs. So we, as an experienced team of analysts, have to dive deep and vet newer companies. And we’ve recommended a handful of promising biotech and genomics companies in the last year.
I’ve had fantastic success finding companies that, while still young, are further along in their product development. It means far less risk while still enjoying the benefits of a massive stock mega trend.
As an example, my readers in Green Zone Fortunes are up big on shares of a game-changing genomics company I recommended last year. And I expect still more gains to come. If you want to learn about my No. 1 genomics stock behind a technology I call “Imperium,” watch my presentation here.
And in the coming October issue, I will add another genomics stock to my Green Zone Fortunes portfolio that stands to massively benefit from this durable mega trend.
Click here to see how you can gain access to our current genomics plays and be one of the first with the opportunity to invest in my October recommendation coming later this month.
You don’t want to miss this!
To good profits,
Chief Investment Strategist