If you're looking for stocks that can double your money or better, the biotechnology industry is a pretty good place to start. Hardly a week goes by where clinical trial results or FDA decisions don't send at least one biotech stock rocketing higher.

Wall Street analysts following these biotechs have high expectations for the drugs they're developing and in one case already marketing. In fact, all three have price targets that suggest more than 100% upside once the rest of the stock market comes to the same conclusions.

A group of scientists at work in a laboratory.

Image source: Getty Images.

Blindly investing in stocks with promising price targets isn't a great investing strategy. That said, hidden gems do get uncovered from time to time. Read on to find out more about three risky biotech stocks that could pay out huge rewards in the foreseeable future.

Allakos

Allakos (NASDAQ:ALLK) is a clinical-stage biotech that's developing new drugs to treat severe autoimmune diseases.  The company's lead candidate, lirentelimab is a potential first-in-class antibody that depletes eosinophils and inhibits mast cells. These are white blood cells that fight infections and play a key role in allergic reactions.

Recently revealed clinical trial results inspired Patrick Trucchio from H.C. Wainwright to pin a $230 price target on Allakos that suggests the stock could run 189% higher. During the phase 2 Enigma trial, patients with severe autoimmune disorders of the stomach and small intestine called eosinophilic gastritis and eosinophilic duodenitis received one of two dosages of lirentelimab or a placebo. Results showed an average eosinophil reduction of 86%, compared with a 9% increase for the placebo group.

Knocking down eosinophil production with Allakos lead candidate improved symptom scores by 48% while the placebo group only improved by 22%. This should translate to meaningful improvements for patients suffering from eosinophil-driven inflammation of their digestive tract and eventually blockbuster sales for Allakos.

Affimed

Affimed (NASDAQ:AFMD) is developing new drugs that help patients' immune systems fight cancer. The company's lead candidate, AFM13 is an experimental treatment for patients with peripheral T-cell lymphoma (PTCL) that targets CD30 positive cancer cells. Affimed's candidate also brings circulating natural killer cells (NK) into contact with tumor cells by selectively binding to CD16A while avoiding CD16B. 

Targeting CD16 proteins to engage NK cells is nothing new, but Affimed is the first to avoid CD16B. So far the results are compelling. Affimed's unique approach shrank tumors for four out of four evaluable patients treated with NK cells and AFMD13. 

BMO Capital analyst Do Kim recently raised his price target on Affimed to $15, implying 134% upside potential. Investors could realize that potential before the end of 2021 if the next readout with AFM13 falls in line with the first.

Doctors looking at a tablet.

Image source: Getty Images.

Deciphera

In 2020, Deciphera (NASDAQ:DCPH) launched its first drug, Qinlock after the FDA gave it a green light but sales so far have been fairly disappointing. That's because the FDA only approved it to treat patients with gastrointestinal stromal tumors (GIST) who relapse after trying all three currently available targeted therapies.

Credit Suisse analyst Brad Canino has a bold $78 price target on Deciphera because he believes Qinlock's about to become a lot more popular. In the fourth quarter, the company expects to report topline results from a pivotal study that could convince the FDA to bump Qinlock up to a second-line indication.

During the study that led to Qinlock's approval in the fourth-line setting, the drug reduced patients' risk of death by an outstanding 64% compared to the placebo group. I'll be shocked if investigators don't uncover a meaningful benefit for patients in the second-line setting as well. 

Looking out

Before making a huge bet on Allakos, it's important to realize efficacy is less than half the picture when it comes to new antiinflammatory drugs meant for long-term use. Patients received just four monthly infusions during the Enigma trial, so there's still a lot we don't know about lirentelimab's long-term safety profile.

Results from the first four evaluable patients treated with Affimed's lead candidate were highly encouraging but investors probably want to tread lightly with this stock. New cancer drug candidates that look amazing for just a few patients have a tendency to disappoint once more data rolls in.

Disappointing first-quarter sales have pushed Deciphera's shares into bargain territory for a commercial-stage biotech with a pipeline full of wholly owned cancer therapy candidates. Potential expansion to treat second-line GIST patients would be icing on the cake making this a pretty good biotech stock to buy right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.