Investing in biotech companies, especially relatively small ones, can be a double-edged sword. Their stocks often soar on strong news about clinical trials or regulations, but they can lose a lot of their value overnight if the results of a study don’t go their way. That makes many biotech stocks somewhat risky investments, but some can deliver excellent results for those who can stomach the risk.
Two biotech companies whose stocks could rise significantly in the coming months and years are Viking Therapeutics (NASDAQ: VKTX) And Sarepta Therapeutica (NASDAQ: SRPT).
1. Viking Therapeutica
Viking Therapeutics is a clinical-stage biotech whose shares have risen significantly this year. The drugmaker can thank its lead candidate, VK2735, a potential GLP-1 weight-loss therapy that delivered strong results in a phase 2 trial. At least two scenarios could send Viking’s shares higher in the months and years ahead.
The first scenario involves Viking Therapeutics advancing VK2735 to late-stage research and proving the drug to be safe and effective. The biotech could then gain a foothold in the fast-growing weight-loss market. It’s difficult to make accurate estimates years in advance of a drug’s release, but William Blair analyst Andy Hsieh has predicted that VK2735 could generate around $21.6 billion in annual sales at its peak. If this prediction is even close to accurate, Viking’s stock could continue its momentum for a while. The stock could also skyrocket if the company becomes a takeover target.
Many leading pharmaceutical companies are racing to enter the lucrative market for effective new weight-loss treatments. Yet few have produced the clinical trial results that this mid-cap company has. Acquiring Viking Therapeutics would be a quick way for one of them to acquire a promising candidate in this niche and the team that developed it.
Viking is also working on an oral version of VK2735. And elsewhere in the pipeline, a Phase 2 clinical trial of VK2809 produced positive results as a potential therapy for metabolic dysfunction-associated steatohepatitis (MASH), another condition with high unmet need. The Food and Drug Administration (FDA) approved the first MASH therapy earlier this year, but there is room in the market for more.
If Viking Therapeutics continues to make steady progress with its lead candidates, the stock could deliver even more outsized returns. However, this biotech stock is somewhat risky: If VK2735’s clinical results aren’t impressive, the stock could fall off a cliff. Invest accordingly.
2. Sarepta Therapeutica
Sarepta Therapeutics specializes in the development of medicines for Duchenne muscular dystrophy, a rare, progressive neuromuscular disorder in children.
The company’s lead product is Elevidys, a gene therapy for Duchenne muscular dystrophy. Elevidys recently received traditional FDA approval for outpatients and accelerated approval for non-ambulatory patients. This means Sarepta Therapeutics will need to prove its efficacy in non-ambulatory patients in a post-marketing study to get the full blessing of regulators.
So far, Elevidys is performing well, helping Sarepta deliver strong results. In the second quarter, total revenue increased 39% year-over-year to $362.9 million. EPS of $0.07 was much better than the loss per share of $0.27 in the same period last year. The company’s stock has outperformed the broader market so far in 2024, but it could do even better if it receives full approval for Elevidys for non-ambulatory patients with Duchenne muscular dystrophy. Elevidys is already contributing significantly to strong financial results.
But this regulatory victory could improve things. It’s also worth noting that Sarepta is looking to diversify its product lineup. All four of its approved therapies treat Duchenne muscular dystrophy, but in January it launched a Phase 3 trial for a potential therapy for Limb-Girdle muscular dystrophy. In all, Sarepta Therapeutics has more than 40 candidates for conditions across the rare disease spectrum — not bad for a biotech worth just under $13 billion.
The company’s shares could deliver above-average returns if the company continues to develop innovative therapies for diseases with high unmet needs.
Should You Invest $1,000 In Viking Therapeutics Now?
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
These 2 Biotech Stocks Are Going to Rise was originally published by The Motley Fool
