The #1 Insider Stock for 2024

Over the past decade, investing in biotech stocks with insider buying has tripled the S&P 500’s return.

Tandem Diabetes Care (Nasdaq: TNDM) and Exscientia PLC (Nasdaq: EXAI) are prime examples of some I’ve recommended. The former was a particularly big winner, allowing my readers to lock in up to a 1,795% gain in less than one year.

Needless to say, I’m bullish on the industry.

But there’s one big problem faced by most biotechs…

Drug discovery.

More specifically, how long drug discovery takes and how much it costs. Drug discovery hasn’t changed much in the last century. It still takes up to a decade or even more in some cases to develop a new drug.

It’s a long, manual process with lots of trial and error (not to mention government red tape) that can be performed only by highly trained resources. Because of that, it’s also astronomically expensive. The average cost to develop a new drug is $2.6 billion…

That’s a lot of money to shell out for a drug that may not even make the cut – a full 9 out of 10 drugs entering Phase 1 clinical trials never make it to market. They get shot down by the Food and Drug Administration (FDA), often for good reason. But by that point it’s already cost billions of dollars to develop them.

That’s changing, though. And it’s changing fast. Artificial intelligence (AI) is capable of making drug development a faster and cheaper process with fewer costly failures.

It can shorten drug development times from a decade-plus on average to just a few short years and give us better, longer, healthier lives in the process.

And the company in this report is using AI to support the entire biotech industry. Because, unlike many biotech companies that focus on only one specific segment of the drug development process, this company helps other biotechs make new breakout discoveries.

In fact, it has supported 80% of all FDA-approved novel drugs that have hit the market over the past five years. If you’re taking a new drug, there’s a good chance this company helped develop it.

It’s called Charles River Laboratories Inc. (NYSE: CRL) I’m expecting big things for it this year because its insiders are piling in at a breakneck pace…

Rollin’ on the River

Founded in 1947 and based in Wilmington, Massachusetts, Charles River is proof positive that you can teach an old dog new tricks. It’s older than many of the drug companies it works with, but it’s an innovator in the industry, adopting new technology to drive drug development forward.

So what does Charles River do, exactly? It would almost be easier to tell you everything it doesn’t do for its clients. It offers research models and services, laboratory services, scientific and regulatory advisement, biologics testing, cell sourcing, safety assessment, gene therapy solutions, and scientific staffing, training, and operations.

But what I want to focus on is the company’s discovery services division. That’s where the real opportunity is for investors…

Everything else that Charles River does would make it a solid blue chip in the industry, but it’s the AI-driven drug discovery that gives Charles River its growth potential…

To start, Charles River’s drug discovery services can reduce the preclinical drug development time from the average of 33 to 36 months down to 24 months, shaving a full year off.

Combining Charles River’s decades of experience and AI programs, the company has delivered more than 100 preclinical candidates to its partners since 2017, and the list is growing rapidly. Thirty-four percent of those advanced to clinical trials, almost double the industry average.

The company’s Logica AI program eliminates much of the trial and error that makes drug development so costly and time-consuming. Most drug molecules don’t even make it to preclinical trials. But Logica can narrow down all the possible molecules to just those that have potential.

And as you can see from the chart above, those new drug candidates are for diseases that run the gamut from inflammation to oncology to cardiovascular conditions. Logica can quickly iterate through billions of virtual molecules to eliminate the ones without potential and hand companies only the ones that will be viable for clinical trials. From there, drug companies can iterate through them and find the ones to take to market.

Logica has a 90% success rate in producing drug leads for other companies to advance.

With more than 150 facilities in 21 countries and involvement in 80% of all FDA-approved drugs over the last five years, Charles River has worked with many of the biggest pharmaceutical companies in the world and makes a massive difference in the lives of thousands of people.

Making a Real and Profound Difference

One prime example of how Charles River’s collaboration with drug companies is making a difference is Casgevy, the world’s first gene therapy treatment.

It’s now manufactured by Charles River due to a partnership with Vertex Pharmaceuticals. It’s used to treat sickle cell disease (SCD) and beta-thalassemia (BT).

Sickle cell disease is a genetically inherited condition. It causes red blood cells to have a curved sickle shape as opposed to the round shape found in normal blood.

The sickle-shaped cells don’t pass smoothly through veins and arteries like round cells and so can get caught, eventually building up and blocking blood flow, sort of like a blood clot.

When that happens, it creates what’s called a vaso-occlusive crisis, which can cause pain, anemia, swelling of the hands and feet, bacterial infections, and stroke.

This common condition is debilitating and reduces a patient’s life expectancy to just 40 to 60 years on average. The most physically draining, and well-known, subtype of the disease is called sickle cell anemia. But all forms of SCD have the same result: They leave the body without enough oxygen and cause fatigue (anemia). One out of every 365 Black babies born is afflicted with SCD, and 57% develop sickle cell anemia… Currently, 100,000 Americans suffer from some form of sickle cell disease.

Beta-thalassemia is another condition that is much simpler to understand but no less debilitating than sickle cell disease. It’s a genetic condition that causes a patient to produce less hemoglobin, the compound that allows the transportation of oxygen through the blood. It affects 1 in 100,000 people and is one of the most common autosomal recessive diseases in the world.

But what’s very exciting is that Casgevy is the world’s first gene-edited therapy on the market, offering relief and hope to patients with either of these two diseases. Casgevy uses CRISPR technology to actually alter the genes of its SCD patients and make their blood work normally by grafting itself to their bone marrow and using their own edited stem cells to increase production of hemoglobin F, which improves the function and production of red blood cells.

For patients with beta-thalassemia, it makes their bodies produce more red blood cells, eliminating the need for regular transfusions.

It can treat both conditions through just an IV infusion. And that’s far from the only collaboration Charles River has going for it…

The company collaborated with Japanese drug giant Takeda Pharmaceuticals on its four core therapeutic areas – oncology, gastroenterology, neuroscience and rare diseases – with the goal of delivering preclinical candidates.

It also has a long-standing partnership (since 2012) with AstraZeneca as its preferred strategic partner for outsourcing regulatory safety assessment and development of drug metabolism and pharmacokinetics.

Charles River is also working with Pfizer to develop oncology drugs. The pharma giant is interested in taking advantage of Charles River’s 3D tumor models, cell therapy and CAR-T testing, bioinformatics (mining big data to discover precision therapies), and tumor gene expression analysis.

These are some heavy-hitting partners, and Charles River has a healthy balance sheet to prove it…

A Blue Chip With Growth Potential

As fantastic as the potential of Logica is, Charles River would be worth buying based on its financials alone…

Let’s start with revenue. For 2023, the company brought in $4.12 billion, up 3.9% year over year. And that revenue has increased at a compound annual growth rate of 12.2% over the last three years and 13.48% over the last 10. This is some of the fastest growth in its industry.

The company’s net margin stands at 11.49%, and its net income has grown at an average rate of 18.47% each year since 2020. Free cash flow surged 23.9% to $365.4 million in 2023, and the company’s cash reserves stand at $276.77 million.

But I think the biggest growth is just on the horizon, based on the fact that insiders have loaded up on $1.45 million worth of shares in the last 12 months, with some of the fastest buying happening as we were coming into the end of 2023.

Among the biggest purchases were those from the CEO, James C. Foster, who bought 5,620 shares for just over $1 million, and COO Birgit Girshick, who bought 1,322 shares for $248,298, both in November 2023.

That’s a prime example of the cluster buying that I look for – and from two of the highest-ranking executives at the company to boot…

And when I see high-level insiders plunk down big money on their own stocks, I know something big is likely to happen soon… It’s time to trade alongside these experts and buy Charles River.

***Action to Take***
Buy Charles River Laboratories International Inc. (NYSE: CRL) at market. Set a 25% trailing stop to protect your principal and profit.

Following the River

Charles River sits at a crossroads of AI, biotech and insider buying: two industries growing at an incredible pace plus the single greatest indicator I’ve ever seen in the market… All in one stock!

The company’s incredible technology and the niche it’s carved out in the biotech industry make it a great investment…

But considering two of its highest-ranking executives are eating their own cooking to the tune of $1.2 million, this goes from a great buy to an out-and-out incredible opportunity.

I’m bullish on the biotech industry, I’m bullish on AI, and I’ve always been bullish on companies with massive insider purchases. This is not an opportunity you want to pass up, and it’s my #1 insider stock pick for this year.