How To Pick A Winner In Biotech

Just as humankind sent men to the moon, developed instant communication and delivered clean water and energy to a world that constantly needs more of both… doctors and other researchers have once again moved the scientific ball forward.

We’ve witnessed remarkable scientific advancements in the past century. 

Influenza viruses can now be treated. Polio no longer keeps children inside. AIDS, while still a global pandemic, is treatable with antiretroviral drug cocktails. Smallpox and diphtheria are essentially eradicated. Many types of cancer are now considered manageable health concerns rather than deadly diseases with grim prognoses.

Despite these medical advances, humanity lives with the continual threat of serious and deadly diseases, some of which are functionally untreatable. What’s emerging as the key to combating many of these conditions is a series of novel approaches to delivering therapy.

For most of the history of medicine, these therapies have relied on delivering a chemical to the bloodstream. Aspirin, Viagra, Xanax, Lipitor — these are all chemically based. But now the basic approach of cutting-edge therapeutics has shifted. The new class of medicines and vaccines don’t rely on chemicals, but on biology. They use the body’s remarkably powerful ability to respond to threats and heal itself by triggering natural immune and other responses. 

This area of pharmacology is known broadly as biotechnology. Rather than mixing together chemical compounds, these drugs tweak targeted elements of the body’s genetic code to produce a specific reactions. The latest in this class rely on novel methods of therapeutic delivery.

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One area that always offers potential is the biotechnology revolution. The tricky part is knowing when to get in on the ground floor, and when to wait.

Many folks pay attention to a biotech breakthrough only after it results in a prescription drug that’s on the market, helping patients lead better lives. Occasionally, a truly revolutionary treatment becomes famous before it receives full approval. But most of the time, these breakthrough remedies are ignored by the crowd as they’re going through clinical trials.

Of course, by the time the drug is approved, shares of the company that developed it have already been gobbled up by early investors. The secret to making big money in biotech is digging into the research and making calculated bets on the best technologies.

Take Inovio (Nasdaq: INO), a fascinating pharmaceutical company that I initially recommended in January 2011. It’s doing mad science that could truly change the world. It boils down to two nifty pieces of technology:

The first is a little snippet of DNA called a plasmid, a little piece of genetic code that can replicate independently of the cell’s chromosomal DNA, the stuff that makes you you. Think of your DNA as the software that runs your body — these plasmids are like little software patches. They are introduced into a cell, where they replicate and trigger an antigen that can either 1) create antibodies that will hunt down and kill a virus within the body, the “humoral immune response,” or 2) create little samurai called T-cells that take care of business inside the cell, the “cellular immune response.” Inovio develops plasmids that will vaccinate against or treat serious diseases.

The second cool technology is Inovio’s delivery method. Though tiny, the jillions of cells that make up tissue are nearly impenetrable. To introduce plasmids into cells, you need to get past the cellular membrane.

To do so, Inovio uses a process called “electroporation.” It is exactly what it sounds like: The creation of an electric field that basically shocks the pores of the cells’ membranes open. This allows for sufficient permeability to let the plasmid in to take care of whatever it needs to hunt down, be it a virus, bacteria, a microorganism, even cancer.

Inovio’s plasmids, known as “synthetic vaccines,” and the electroporation delivery system, are fast, easy, stable and most of all, cheap, to produce. These advantages over traditional vaccines could make Inovio a household name — if its synthetic vaccines are proved effective in clinical trials.

Inovio is working on a number of vaccines to either prevent or treat several conditions, including cervical cancer, leukemia, hepatitis C and B, HIV and malaria. These are being developed, in preclinical Phase I and Phase II trials, with partners including the University of Pennsylvania, Drexel University, the U.S. Military HIV Research Program, the U.S. Army Medical Research Institute of Infectious Diseases and the Department of Homeland Security.

It’s hard to bet against such exciting technology. But don’t too excited just yet. Right now, everything depends on what happens in the lab, and on the success of its various clinical trials. Most of Inovio’s products are, after all, still in the very early stages of development. 

But that was even truer in January 2011, when I first recommended the stock. It then proceeded to gain more than 200% over the next three years.

Given the potential for winners like Inovio that can profit from the growth in vaccine use, I’m continually scanning the health care waterfront for companies that can benefit from this and other long-term trends. I’m keeping a close eye on Inovio and will let you know if I identify another attractive entry point for this super-cool pharma innovator.

Until then, you can check out two more exciting health care recommendations I recently made in my new research report, 10 Shockingly Profitable Predictions for 2016. 

As the world continues looking for more effective ways to solve our planet’s health problems, I’ve found two companies whose medical breakthroughs are likely to help them deliver huge returns to early investors.

If you’d like the names of these stocks — along with 8 other early financial predictions for 2016 — I invite you to click here.