Artificial intelligence is changing the drug-discovery process by making it much faster and cheaper. Traditionally, most biotech stock drug candidates fail. Indeed, according to Nature, “An estimated 86% of drug candidates developed between 2000 and 2015 did not meet their stated endpoints.” And the well-respected consulting firm McKinsey reported that “Today, to discover and develop a drug takes more than ten years.” Meanwhile, AI can cut that same time frame down to just one year. That being said, investors may want to pay close attention to these top three biotech stocks to buy and hold.
Biotech Stocks: Schrodinger (SDGR)
Schrodinger (NASDAQ:SDGR) uses artificial intelligence, physics, and software to speed up the drug discovery process. In addition, SDGR’s system also significantly increases the chances of selecting molecules that will ultimately become successful treatments. With that, a good number of companies are already using that AI software to identify which molecules will work best together to create a successful drug.
Even better, the company is conducting a Phase I trial of one of its own MALT 1 inhibitors, SGR-1505, which, if successful, could help treat “several non-Hodgkin’s B-cell lymphomas, including activated B cell-like diffuse large B cell lymphoma (ABC-DLBCL), mantle cell lymphoma, and chronic lymphocytic leukemia,” as noted on the company’s site.
Bristol-Myers Squibb (BMY)
As I noted in a June column, “Bristol Myers-Squibb (NYSE:BMY) has formed a comprehensive partnership with Schrodinger… to leverage (its) physics and AI-based technology for accelerated drug discovery.”
BMY agreed to collaborate with SDGR on the development of treatments for neurological diseases. The two companies had already been working on creating drugs for oncology and immunology illnesses. Given BMY’s extensive partnership with SDGR and my belief in the tremendous power of AI, I’m upbeat about BMY’s longer-term outlook.
Also noteworthy is that BMY’s cancer treatment, Opdivo, continues to show efficacy in more types of cancer. Even better, the European Union (EU) recently approved Opdivo as a treatment for melanoma. In addition, the drug recently met its two endpoints in a Phase 3 trial that evaluated its effectiveness as “a first-line option for patients with bladder cancer.”
Exscientia (EXAI)
Like Schrodinger, Exscientia (NASDAQ:EXAI) uses AI to make the drug-discovery process cheaper, faster, and more efficient.
Validating EXAI’s technology, the company has developed one drug that entered clinical trials in partnership with Bristol-Myers and another that entered clinical trials in partnership with a large Japanese drug maker, Sumitomo. Moreover, last month, EXAI, along with its partner, China’s GT Apeiron, enrolled its initial patients in the Phase 1/2 trial of their potential cancer treatment. The trial will test the drug’s efficacy in multiple types of solid tumors.
On the date of publication, Larry Ramer was long SDGR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.