Are you looking for stocks that can make big gains in a relatively short amount of time? If your answer's yes, the biotech industry has you covered.

Last week, two biotech companies independently announced some surprisingly good news that got the attention of investment banks on Wall Street. In response to their improved prospects, the analysts who follow these companies now think those stocks can triple your money or better.

Scientist at work in a biotechnology laboratory.

Image source: Getty Images.

Ardelyx

Ardelyx (ARDX 1.20%) is a commercial-stage biotech that markets a drug called Ibsrela for irritable bowel syndrome. Sales of Ibsrela have been somewhat disappointing since it earned approval in 2019. Luckily, Piper Sandler analyst Christopher Raymond thinks the company's next drug could be a blockbuster.

Ardelyx is developing an experimental new drug, to be called Xphozah, for the treatment of chronic kidney disease (CKD). Specifically, it's meant to control blood phosphorus levels, which can get dangerously high for CKD patients on dialysis.

Instead of approving Xphozah, the Food and Drug Administration sent Ardelyx a complete response letter (CRL) last year. According to Ardelyx, the FDA wasn't convinced that the treatment effect measured in clinical trials actually showed a significant benefit for patients.

Recently, the FDA convened a panel of independent experts who voted 9 to 4 that treatment with Xphozah outweighs the apparent risks when used on its own. The panel also voted 10 to 2 in favor of its use in combination with existing phosphorus-removal treatments. The agency doesn't necessarily heed the advice of its advisory panels, but they usually land on the same page. This means there's a good chance Xphozah can earn approval in 2023.

Ardelyx popped more than 40% higher overnight in response to the advisory committee outcome, but the stock still sports a relatively small market cap of just $322 million. With a mismatch between Xphozah's potential and its market value, Raymond thinks the stock can rise another 365% from its recent closing price.

4D Molecular Therapeutics

Shares of 4D Molecular Therapeutics (FDMT 5.54%), also known as 4DMT, have risen around 150% this month, in response to positive clinical-trial readouts for two experimental drugs in early-stage testing.

First, the company reported early signs of success with a gene-therapy candidate, 4D-710, for the treatment of cystic fibrosis. Treatment of the first three patients with 4D-710 revealed no adverse events. This is a good start because the company is exploring all-new methods of delivering gene therapies.

Goldman Sachs analyst Salveen Richter recently upgraded 4DMT to a buy, largely based on more recently released results of a phase 1 study in patients with wet age-related macular degeneration (AMD). The results made Richter so bullish that the analyst slapped a price target on the stock implying 204% of upside.

Wet AMD is a relatively common cause of blindness in older adults. Drugs to slow the progression of AMD currently generate billions of dollars, but they require frequent administration. 4DMT's wet AMD candidate, 4D-150, is designed to make retina cells begin producing their own version of Eylea, an injected drug that racked up nearly $8 billion in sales last year.

The stock is soaring because, among the first evaluable patients treated with 4D-150, none have exhibited serious side effects. Three out of three evaluable participants had detectable levels of Eylea's active ingredient inside their eyes, where it's needed. Among the five patients treated so far, only one has received supplemental Eylea injections.

Good stocks to buy now?

With a market cap of around $701 million at recent prices, there's a lot of room for 4DMT to run higher if 4D-150 continues to impress. Before you run out and plow all your savings into either 4DMT or Ardelyx, though, it's important to understand that they're quite risky.

Generally speaking, the vast majority of drug candidates that succeed in early-stage clinical trials don't make it all the way to commercialization. 4DMT has a chance at delivering big gains, but it's a long way from guaranteed.

Ardelyx is arguably a safer option because it has one approved drug and another one very close to the finish line. Unfortunately, new drug launches are highly unpredictable. With this in mind, it's probably best to keep both of these stocks on a watch list for now.