Whether you realize it or not, for over a year now, picking growth stocks that perform well has been much easier than usual. After climbing 43% in 2023, the Nasdaq Composite index is still up by a healthy 39% over the past 12 months.
Despite such a big run-up for the major market index most associated with growth stocks, investment bank analysts who follow the biopharmaceutical industry expect more gains ahead from a pair of exceptional businesses.
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Viking Therapeutics
Shares of Viking Therapeutics (VKTX 7.92%) are up about 275% in 2023, but analysts on Wall Street think it isn't finished climbing yet. The consensus price target on the clinical-stage biotech stock suggests a 47% gain could be up ahead.
Viking Therapeutics stock shot higher in February after the company announced surprisingly positive results from a phase 2 trial with an anti-obesity candidate called VK2735. Viking's candidate is similar to Eli Lilly's tirzepatide, the active ingredient in Mounjaro and Zepbound.
Investigators randomized 174 patients to receive a placebo or one of four dosages of VK2735. Patients who received the highest dose achieved a 14.7% average weight reduction after 13 weeks compared to a 1.7% average weight reduction among the placebo group.
It's early still, but VK2735's performance appears competitive with Lilly's tirzepatide. Wall Street analysts expect sales of tirzepatide to top out above $50 billion annually. If Viking's candidate continues to produce impressive clinical-trial results, a deep-pocketed pharmaceutical giant could be tempted to make a juicy buyout offer that sends the stock even higher.
Before betting all your chips on Viking Therapeutics, it's important to realize it could be more than a year before it has any approved products to sell. Despite this unattractive timeline, the company's market cap has swelled to $7 billion at recent prices.
Viking Therapeutics stock could climb much higher, but any sign of trouble in upcoming clinical-trial readouts could lead to severe losses. If you're going to take a chance on this stock, make it a very small part of a diverse portfolio.
Iovance Biotherapeutics
Shares of Iovance Biotherapeutics (IOVA 0.87%) have more than tripled over the past six months, but Wall Street expects further gains. The consensus price target on the stock implies another 73% rise by this time next year.
Iovance stock is way up because the Food and Drug Administration (FDA) approved the company's first cancer therapy in February. Amtagvi is a first-in-class treatment for skin cancer patients made from immune cells that naturally surround and attack tumors called tumor-infiltrating lymphocytes.
Amtagvi earned accelerated approval to treat advanced-stage melanoma patients who relapsed after treatment with Keytruda or a similar drug. This is a difficult-to-treat population. However, the therapy shrank tumors for 23 out of 73 evaluable patients.
Amtagvi was given accelerated approval based on tumor response rates. To remain marketable, though, Iovance needs to show the FDA that it provides a long-term survival benefit. A decent tumor response rate suggests subsequent trials can demonstrate the necessary benefit, but success is far from guaranteed.
Iovance is also developing a lung cancer treatment similar to Amtagvi, called LN-145. Like its predecessor, LN-145 is made from a patient's tumor-infiltrating lymphocytes that are modified to recognize surface proteins specific to the patient's tumors.
Iovance has already earned accelerated approval for its first drug, but it's arguably riskier than Viking Therapeutics. At recent prices, Iovance sports a big $4.3 billion market cap even though sales of complex cellular-cancer therapies tend to underperform pre-launch expectations. It's probably best to tread lightly with this stock until after there have been some successful initial launch figures for its first drug.
