Eli Lilly (LLY 2.07%) has crushed the market over the past decade, largely thanks to breakthroughs within its core therapeutic area. Some might think it's too late to invest in the stock. Eli Lilly is now the largest healthcare stock in the world, with a market cap that at one point climbed above $1 trillion.
While I think Eli Lilly remains a buy, if you think you missed out, it's worth considering smaller stocks that aim to emulate its success. Here are two: Viking Therapeutics (VKTX 1.73%) and Abivax (ABVX +4.14%).
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1. Viking Therapeutics
Viking Therapeutics is following in Eli Lilly's footsteps by trying to develop effective weight loss medicines. The biotech company's leading candidate, VK2735, is a dual GLP-1/GIP agonist (it mimics the action of these two gut hormones), just like Eli Lilly's Zepbound. VK2735 is undergoing a phase 3 study for which we should see results by next year.
NASDAQ: VKTX
Key Data Points
Viking Therapeutics is also developing an oral version of this therapy, while testing different ways to help patients keep the weight off after losing it, using various dosing schedules (daily, weekly, monthly) for both the oral and subcutaneous formulations.
What makes this stock somewhat promising is that Viking Therapeutics' phase 2 results for VK2735 were strong, and the company could differentiate itself with its oral and subcutaneous formulations of the medicine under development. However, Viking Therapeutics is also risky, as clinical setbacks will sink its share price.
2. Abivax
Abivax's leading candidate, obefazimod, could enter a crowded market. It is being developed as a potential treatment for ulcerative colitis (UC) and other autoimmune conditions. Many drugmakers, including Eli Lilly, market medicines in this area. However, obefazimod works differently from most. It could help control UC symptoms and help patients achieve remission without suppressing immune system activity.
That's how some immunosuppressant drugs work, hence their name. However, reducing immune system activity has drawbacks, such as making patients more susceptible to certain diseases.
NASDAQ: ABVX
Key Data Points
Obefazimod could address this problem while still demonstrating strong efficacy, as it has so far in clinical trials. Abivax is currently running a maintenance study of obefazimod in UC patients, with results planned for announcement during the second quarter.
If the medicine can demonstrate sustained efficacy, Abivax's shares could jump. And eventually, obefazimod could generate over $1 billion in annual sales. The same caveats apply, though: Abivax is a high-risk, potentially high-reward play, as a clinical setback here will crush the stock.
