The biotech segment is a relatively new sector that combines the fields of biology and technology. It integrates natural sciences from biology and engineering aspects from technology to develop products with meaningful applications in areas like medicine, agriculture, therapeutics, and more.
It possesses an astonishing Compounding Annual Growth Rate (CAGR) of 13.96% until 2030. However, companies in the biotech sector carry an immense risk because their performances are largely dependent on drug approvals, which are difficult to predict. A successful drug approval during a health crisis has the potential to give returns in multiples whereas a failure could cause sharp declines in stock prices.
This is especially true and dangerous when investors hold high expectations for drug approvals and it fails. Due to this reason, investors should be cautious and understand the risks of investing in biotech companies. Below are three biotech stocks to sell in July before they crash and investors lose their money.
Cassava Sciences (SAVA)
Cassava Sciences (NASDAQ:SAVA) is a biotech company that has made its name to the public from its Alzheimer’s treatment named Simufilam. While the company is known for Simulfiam, the success of this new developing treatment is highly questionable and the future of the company highly depends on the outcome of the supposedly developing Alzheimer’s treatment.
In the first quarter of 2024, Cassava Science was able to turn things around and reach $25 million in net income as opposed to a $24.3 million net loss. However, Cassava Sciences is still facing larger challenges that could cause significant damage in the future. The Texas-based biotech firm has yet to resolve the ongoing accusations of data manipulation in the Simufilam trial.
Right now, Cassava Sciences has simply too many red flags for investors to be confident about stock recovery. Before it is too late, investors stop taking chances with Cassava Sciences and other biotech stocks to sell.
Moderna (MRNA)
Moderna (NASDAQ:MRNA) was one of the main vaccine producers for the COVID-19 pandemic. From the global outbreak, Moderna naturally made its name known to the public, and its stock price went through the roof and its peak price almost reached $450.00.
However, Moderna has been very disappointing since the COVID-19 pandemic from investors’ point of view. It has not established any significant instruments that could contribute to stable long-term growth. As of writing, a share of Moderna stock goes for $117.07.
In the recent outbreak of bird flu, Moderna received $176 million from the U.S. government to develop an mRNA bird flu vaccine, which allowed its stock to bounce back. However, this is only a short-term surge and is not indicative of Moderna’s long-term destiny. If anything, it demonstrates to investors that Moderna is overly reliant on health crises and at its fairly overpriced value, investors should treat Moderna among biotech stocks to sell.
Ginkgo Bioworks (DNA)
Ginkgo Bioworks (NYSE:DNA) is an American biotech company based in Boston, Massachusetts. The company was founded by five scientists from MIT back in 2008.
In the beginning, it has made promising applications in the biotech field where it developed cell programming solutions. Its technology is mainly used to help produce innovative therapeutics and food ingredients in the agricultural field as well as contribute to research in the field of drug therapy.
However, the company has not been performing well financially in recent years. Compared to peak revenue of $477.7 million two years ago, its revenue almost halved to a mere $208 million in 2024. Currently, its stock price is well below the $1 mark.
Furthermore, Ginkgo Bioworks is getting heavily targeted by short sellers. They are questioning the company’s unstable revenue sources, corporate strategy, and management. For investors, the smartest decision to make with Ginkgo Bioworks is to leave as soon as they can without giving it a second thought.
On the date of publication, Andy Kim 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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.