If you go to Redwood National Park in California, you can see the tallest tree in the world: a redwood called Hyperion, which stands over 400 feet tall. But like any other tree, Hyperion started as a small seed.
Stocks can look like this: They start out small, but grow to gigantic size over time. Three Motley Fool contributors think they’ve found some monster stocks in the making that you can buy right now. This is why they chose Alimmune (NASDAQ: ALT), Axsome Therapeutics (NASDAQ: AXSM)And Viking therapies (NASDAQ: VKTX).
A small cap share with great potential
David Jagielski (Altimmune): Altimmune is a clinical-stage biopharmaceutical company with a modest market cap, but it has an exciting drug in its portfolio that could soon make it a hot buy with investors. The company has a glucagon-like peptide 1 (GLP-1) treatment, pemvidutide, which has shown some encouraging results in clinical trials.
In a Phase 2 study lasting 48 weeks, patients taking pemvidutide achieved an average weight loss of 15.6%. And 30% of patients lost at least 20% of their body weight. These are comparable figures to Wegovy Novo Nordisk‘s GLP-1 drug. In addition to being effective for weight loss, Altimmune is optimistic that pemvidutide may help with other comorbidities, including metabolic dysfunction-associated steatotic liver disease (MASLD) and hypertension.
According to estimates, the market for obesity drugs could reach $100 billion Goldman Sachs. While Novo Nordisk and Eli Lilly are likely to dominate the market, there could be room for pemvidutide to penetrate the market and also become a potential blockbuster drug. The bottom line is the side effects of these medications, as patients tolerate certain treatments better than others. While Eli Lilly and Novo Nordisk are early winners in the GLP-1 drug market, investors shouldn’t rule out Altimmune in the long term.
With a market cap of just over $500 million, this stock could grow significantly higher if pemvidutide wins approval. While the company isn’t profitable and Altimmune carries quite a bit of risk, it has the potential to be a monster growth stock in the future.
A promising biotech on the rise
Prosper Junior Bakiny (Axsome Therapeutics): If it were easy to pick a long-term winner from the smaller biotech companies, everyone would do it. Too many factors can make – or break – a company that wants to rise to prominence. That said, there are important pointers you can pick up when performing this exercise. A number of them lend credence to Axsome Therapeutics’ claims that they will become a much more important player in the industry at some point in the future.
First, the company already has two products on the market (clinical stage companies are much riskier). One is Auvelity, a treatment for depression, and the other is Sunosi, which treats daytime sleepiness due to narcolepsy. Second, and perhaps more importantly, Axsome Therapeutics’ late-stage pipeline is incredibly exciting. Please note that these products are already in Phase 3 trials; some have even undergone at least one such clinical trial.
At this stage of development, the likelihood of a successful launch is much greater than with Phase 2 or Phase 1 studies. Axsome Therapeutics is conducting late-stage trials for several therapies, including Auvelity in Alzheimer’s agitation and Sunosi in ADHD, while AXS-07 and AXS-14 are ready for regulatory submission for the treatment of migraine and migraine, respectively fibromyalgia.
Axsome Therapeutics expects six Phase 3 data readouts from the second half of the year through 2025, and several more late-stage clinical trials. Even a modest 50% success rate would mean that Axsome Therapeutics’ offering will change over the next three years. And there will likely be more clinical and regulatory progress later, given the company’s track record.
Axsome Therapeutics therefore appears to be a promising biotech that is well on its way to the top. Investing in the stock now seems like a great move.
A particularly promising pipeline
Keith Speights (Viking Therapeutics): Viking Therapeutics is the largest of these three monsters in the making, with a market cap of almost $8 billion. The company doesn’t have an approved product yet, but investors are rightly excited about the pipeline.
Viking has four programs in clinical development. The lead candidate, VK2809, is currently in a Phase 2b clinical trial targeting non-alcoholic steatohepatitis (NASH), also known as metabolic-associated steatohepatitis (MASH). The company expects 52-week histology results from this study in the second quarter of 2024.
In February, Viking announced positive results from a Phase 2 trial evaluating an injectable version of VK2735 in the treatment of obesity. The experimental drug produced greater weight loss than Lilly’s Mounjaro/Zepbound and Novo Nordisk’s Ozempic/Wegovy.
Viking had more good news in March with results from a Phase 1 study of an oral tablet version of VK2735. Importantly, the side effects of the tablet were not problematic. The company plans to advance the oral drug into a Phase 2 trial in the second half of this year.
In addition to these three programs, Viking is evaluating VK0214 in a Phase 1b clinical trial targeting X-linked adrenoleukodystrophy (X-ALD), a rare genetic disease that affects the nervous system and adrenal glands. The company expects to report the results of this study by mid-2024.
As David said earlier, obesity could become an annual market worth more than $100 billion. Some analysts believe the NASH/MASH market could also exceed $100 billion. X-ALD doesn’t offer much of an opportunity, but there are currently no approved therapies for the disease. Viking could grow into a much larger drugmaker if its pipeline candidates pass clinical testing and gain regulatory approval.
Should You Invest $1,000 in Viking Therapeutics Now?
Consider the following before purchasing shares in Viking Therapeutics:
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David Jagielski has no position in the stocks mentioned. Keith Speights has no position in any of the stocks mentioned. Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Axsome Therapeutics and Goldman Sachs Group. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
3 Monster Stocks in the Making to Buy Right Now was originally published by The Motley Fool
