Get in early on something big. That's the way many individuals have generated tremendous wealth.
If you're looking to take that same path, healthcare stands out as one of the biggest market opportunities around. Healthcare already makes up nearly one-fifth of the U.S. economy. It's growing, particularly with aging populations around the world.
There are also plenty of investing alternatives to get in early with innovative new healthcare technologies. Here are three healthcare stocks that could make you rich over the next decade.
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Gene editing stands out as one of the most exciting new frontiers in treating disease. Most of the gene-editing therapies in development are comparable to scissors that cut specific parts of the genome. However, there's another gene-editing approach that's even more precise. Base editing is more akin to a pencil than scissors. This method enables erasing and writing one "letter" of the genetic code at a time.
Beam Therapeutics (NASDAQ: BEAM) is the pioneering leader in genomic base editing. The company conducted its initial public offering (IPO) in February 2020. Since then, the stock is up more than 380% and jumped nearly 65% in June alone.
So far, Beam's pipeline candidates are only in the preclinical stage. However, the company plans to file for U.S. Food and Drug Administration (FDA) approval later this year to advance BEAM-101 into early stage clinical testing. The experimental base-editing therapy has been evaluated in preclinical testing as a treatment for rare blood disorders beta-thalassemia and sickle cell disease.
This could be the first of many clinical programs for Beam. The company is researching base-editing approaches that target other genetic diseases as well as types of leukemia. Genetic mutations in a single base (called point mutations) make up around 58% of all known genetic errors linked to diseases. Beam could be in the driver's seat for developing therapies for these diseases.
Skin cancer is, by far, the most common type of cancer in the U.S. One out of every five Americans will likely develop some type of skin cancer during their lifetime. The good news is that survival rates are high for even the worst form of skin cancer -- melanoma -- if diagnosed early enough. The bad news is that the current approach to diagnosing melanoma, which involves cutting the skin and sending a biopsy to a lab for analysis, leaves much to be desired.
DermTech (NASDAQ: DMTK) offers a better solution. With the company's approach, an adhesive patch is applied over a lesion on the skin. The patch is then sent to a lab for genomic analysis. There's no cutting required.
Even better, DermTech's skin genomics test is 17 times less likely to miss a diagnosis of melanoma compared to the biopsy approach. It's also significantly less expensive. And DermTech's test is already covered by Medicare as well as several major private health insurers.
The company estimates that it has a $1.5 billion market opportunity in Medicare melanoma diagnosis alone. However, DermTech is also targeting the private insurance market and is developing genomics tests for other types of skin cancer.
DermTech's total addressable market in skin cancer is around $10 billion per year. With its market cap currently at $1 billion, the stock should have strong growth prospects over the next few years.
There are lots of diseases other than melanoma that are treatable if detected early enough. In many cases, medical imaging is required for early detection. Unfortunately, around two-thirds of the world's population don't have easy access to medical imaging.
Nano-X Imaging (NASDAQ: NNOX) believes that it can fix this problem. The company developed digital X-ray technology that's much smaller (and therefore more portable) and a lot less expensive than conventional X-rays.
In April, Nano-X received FDA clearance for its single-source digital X-ray system. The company filed in June for FDA clearance of the first version of its multi-source system, which has greater commercial potential.
The global medical imaging market stands at close to $21 billion. Nano-X thinks that it will be able to expand this market size by going after market segments in developing nations and rural areas that its rivals don't target. If the company is successful, it will become one of the biggest disruptors in the history of medical imaging.
An important thing to note
I think that each of these healthcare stocks holds the potential to make investors rich. However, there's an important thing to note: They're all quite risky.
Beam Therapeutics is several years away from even having the possibility of launching its first product. DermTech currently offers two skin genomic tests but still has a long way to go to win over dermatologists. Nano-X still awaits an FDA green light for its multi-source digital X-ray system. There's no guarantee that any of these companies will be successful.
The downside to getting in early on something big is that the "something" doesn't always turn out to be as big as you expected. When it does become big, though, there's a lot of money to be made for investors willing to take the risk.
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