Biotech stocks can produce enormous returns on capital in the blink of an eye. The primary reason is that the biotechnology space has finally started to capitalize on the amazing insights proffered by the Human Genome Project, leading to the development of a vast array of new therapies for a variety of hard-to-treat conditions. As an important aside, biotech valuations have also benefited greatly from the aging global population, and the expansion of access to healthcare in numerous countries over the past decade. 

Although dozens of biotech stocks have absolutely sizzled this year, this trio of favorable tailwinds strongly suggests that even more companies are set to experience rapid periods of growth soon. Which biotechs should investors check out right now? My view is that Geron Corporation (NASDAQ:GERN) and Viking Therapeutics (NASDAQ:VKTX) could both make investors very happy heading into the second half of 2018. Here's why.      

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Geron: The countdown has begun

Geron is a small-cap oncology company that's partnered with Johnson & Johnson (NYSE:JNJ) for its sole product candidate imetelstat. After signing a licensing deal for imetelstat in late 2014, the two companies are finally nearing the top-line readout for the drug's advanced myelofibrosis trial that's expected to determine the fate of this collaboration. This all-important data readout is scheduled to occur by the end of third quarter, or no more than 71 days from now. 

According to the terms of the agreement, J&J can either keep imetelstat's rights or return them to Geron in full, once the protocol-specified primary analysis for this trial is complete. Geron then has a decision to make.

If J&J retains imetelstat's rights, Geron can choose to opt in and receive a $65 million milestone payment, but the company will then be on the hook for 20% of the drug's ongoing development costs. On the other hand, Geron can opt out, making it eligible for a $135 million milestone payment. In that case, J&J would shoulder all of the development costs, but Geron would also receive a lower tiered royalty rate on any sales.

Lastly, Geron said it plans on exploring the drug's development in its other lead indication -- myelodysplastic syndromes -- should J&J nix the collaboration. The biotech has been raising capital in recent quarters to do just that. 

What's next? As the protocol-specific analysis for imetelstat's myelofibrosis trial reportedly got under way last quarter, my view is that this readout will occur well before the end of Q3. This trial was fairly small, after all, and J&J is well known for its expediency when it comes to drug development. This data package may, in fact, already be in Geron's hands at this point. 

Therefore, investors shouldn't be surprised if a no-go decision is doled out soon, and the market seems to be reacting to this possibility by having pushed Geron's shares down by double digits since the start of June -- although admittedly, the company's recent capital raises probably aren't helping matters, either.  

Conversely, I think the longer this quiet period lasts, the better the odds that J&J and Geron end up negotiating the next steps of imetelstat's life cycle, and not a break-up. A no-go decision, after all, should be brief and to the point. A negotiation on a possible buyout or an expanded clinical program, on the other hand, would require considerably more effort on both sides.  

The bottom line here is that Geron's stock should easily double on an affirmative continuation decision or buyout offer from partner J&J -- but this stock also comes with the risk of a 50% or more decline if J&J decides to bolt for greener pastures. The bright spot for investors is that the risk of a negative decision should gradually decline with each passing day. 

Viking is set to sail

Viking is a small-cap biotech barreling toward two seminal events that could send its shares into the stratosphere later this year. First up, Viking is reportedly gauging interest from potential partners regarding its experimental hip-fracture drug, VK5211, that successfully completed a midstage trial last November.

As VK5211 addresses an unmet medical need for a large patient population (more than 300,000 patients per year), the company and analysts alike both think this drug represents a billion dollar-plus commercial opportunity. As such, Viking shouldn't have all that much trouble finding a deep-pocketed partner to pay for the drug's pivotal-stage study, and perhaps rake in some much-needed capital in the form of an upfront milestone payment as well. 

Although it's not uncommon for clinical-stage biotechs to partner for their first major drug, Viking can do so without much regret because of the awe-inspiring commercial potential of its second most advanced product. The short version of the story is that Viking's experimental fatty-liver disease drug candidate, VK2809, has the potential to generate peak sales in excess of $2 billion, and that estimate may turn out to be conservative.

What's the big deal? Viking's VK2809 should, in theory, be both safer and more potent than Madrigal Pharmaceuticals' (NASDAQ:MDGL) MGL-3196 -- a medicine that already struck gold in a midstage study and that belongs to the same class of drugs as VK2809. And if you're new to this story, Madrigal's experimental liver-disease drug is a big reason its shares have gained more than 1,800% in the past 12 months. Viking's stock could therefore be primed and ready to follow suit. 

Time to buy? 

While both of these stocks sport staggering upside potentials, they are also super-risky growth vehicles as well. Geron, for its part, may have trouble advancing imetelstat if J&J doesn't stay the course, and Viking's shares will surely tank if VK2809 can't generate at least similar levels of efficacy as Madrigal's MGL-3196. 

All that being said, I think these two speculative biotechs do warrant serious consideration by aggressive investors comfortable with binary outcomes. Both of these biotechs have the potential to enter an exceedingly long period of growth in the decades to come, after all. That's why I plan on owning Geron's stock through this pivotal continuation decision event, and why I also plan on adding Viking Therapeutics stock to my personal portfolio before the end of this month.

George Budwell owns shares of Geron, Johnson & Johnson, and he plans on purchasing shares of Viking Therapeutics within the next two weeks. The Motley Fool owns shares of Johnson & Johnson. The Motley Fool has a disclosure policy.