Exciting trends are sweeping through the biotech industry. One of them is the race to develop breakthrough weight loss medicines, an area that is projected to grow by leaps and bounds through the end of the decade. Gene editing, a set of techniques that are allowing researchers to unlock therapies for diseases that have been untouchable, is another one.
Companies, particularly relatively small ones that make breakthroughs in these fields, could deliver market-crushing returns through 2030. Let's consider two candidates along those lines.
A David in a field of Goliaths
The leaders in the weight area are Novo Nordisk and Eli Lilly, the two largest pharmaceutical companies worldwide by market capitalization. Many other giants in the industry, including Pfizer, Amgen, and AstraZeneca, are also looking to make a mark in this market. However, Viking Therapeutics (VKTX +2.19%), a mid-cap biotech, could become a serious challenger. Viking rose to stardom earlier this year after it released strong results from a phase 2 clinical trial for its leading anti-obesity candidate, VK2735.
This candidate is still some distance away from approval. It needs to go through phase 3 studies first. But that's precisely what could allow Viking Therapeutics' shares to deliver incredible returns through 2030. It is still a clinical-stage biotech with a promising mid-stage candidate that could provide solid clinical and regulatory progress from here on out -- and that is a recipe for success for drugmakers of this size.
NASDAQ: VKTX
Key Data Points
Wall Street is excited about Viking Therapeutics' potential. Andy Hsieh, an analyst at the investment bank William Blair, predicts that VK2735 could generate about $21.6 billion in sales globally, including $14.4 billion in the U.S. and $7.2 billion abroad. Viking is also developing an oral version of VK2735 that reported positive results in a phase 1 study.
That's not to mention the company's VK2809, a potential therapy for non-alcoholic steatohepatitis that also reported solid results in a phase 2 trial -- another area that's projected to grow rapidly through 2030.
Viking Therapeutics plans to start phase 3 studies for its two leading candidates once it discusses things with regulatory authorities. If VK2735 and VK2809 prove effective in late-stage studies and earn approval without a hitch, expect Viking Therapeutics' stock to skyrocket through the end of the decade.
The results of a Nobel Prize-winning discovery
CRISPR Therapeutics is a mid-cap biotech company founded in 2013. It develops gene-editing medicines using CRISPR/Cas9, a technique created by scientists who, as a result of their work, received a Nobel Prize in chemistry in 2020. As impressive as that is, investors would rather see clinical progress leading to regulatory approval.
Ask, and you shall receive. Last year, CRISPR Therapeutics earned its first approval (and the first in the world of CRISPR-based therapies). Casgevy, which it developed alongside Vertex Pharmaceuticals, earned regulatory approval in Great Britain, the U.S., the European Union, Saudi Arabia, and Bahrain.
NASDAQ: CRSP
Key Data Points
Casgevy treats sickle cell disease and transfusion-dependent beta-thalassemia, two rare blood disorders. CRISPR Therapeutics and Vertex are looking at an addressable market of 35,000 patients in the U.S. and Europe and an additional 23,000 in the Middle East. Gene-editing therapies aren't cheap. Casgevy will cost $2.2 million in the U.S. Bluebird Bio, a small-cap gene editing specialist, famously exited the European market after failing to sign lucrative deals with third-party payers.
That's why CRISPR Therapeutics' partnership with Vertex, a company with significant experience negotiating with insurers across much of the developed world, is so important. Beyond Casgevy, though, CRISPR Therapeutics' work in gene editing could unlock more breakthrough medicines in the coming year. The company's pipeline features exciting candidates, including a couple that could functionally cure type 1 diabetes.
If Casgevy reaches its peak potential while CRISPR Therapeutics continues to advance programs through the pipeline, the result could be outsized returns for shareholders.
Read the fine print
There is no question that Viking Therapeutics and CRISPR Therapeutics look incredibly promising. However, investors should also consider the risks associated with both biotech stocks. That is especially true of Viking Therapeutics, which has no approved treatments or ongoing late-stage trials yet. The biotech's potential is massive, but so is its downside. It's essential to keep that in mind.
Viking Therapeutics and CRISPR Therapeutics could be the best-performing biotechs through 2030, but they could also move in the opposite direction if things don't go their way. Invest accordingly.
