Over the trailing-12-month period, shares of French biotech Abivax (ABVX 1.26%) have skyrocketed by a little over 1,000%. The company has made tremendous progress with obefazimod, its leading pipeline candidate, which explains this performance. And even after this run, there might be significant upside left for the stock.
Here are two reasons Abivax's stock could 10x over the next decade.
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1. A potential breakthrough
Abivax is developing obefazimod as a potential treatment for ulcerative colitis (UC). There are plenty of medicines in this niche, so the bar for approval is higher. That might not be a problem for obefazimod. In fact, this therapy could be a breakthrough for the treatment of UC. Most medicines that treat moderate to severe UC are immunosuppressants -- that is, they block the activity of some parts of the immune system. They are effective, but they also make patients -- especially those who take them over long periods -- more vulnerable to a range of other conditions.
Obefazimod works differently and has already shown strong efficacy, including in a phase 3 study. Further, obefazimod is an oral medication, whereas some UC medicines, including leading ones such as Johnson & Johnson's Stelara, are administered by subcutaneous injection. Obefazimod's potential to disrupt the UC market is a key reason Abivax's shares could skyrocket over the next decade.
NASDAQ: ABVX
Key Data Points
2. Broad potential applicability
While obefazimod's potential in UC looks promising, for Abivax's shares to skyrocket over the next 10 years, the medicine will have to earn label expansions in other areas. And sure enough, the biotech is running trials to test whether its leading candidate is effective in treating other immunology conditions, including Crohn's disease.
The drugmaker will likely go after even more indications in the future. With near-flawless clinical execution across several immunology diseases, Abivax could become a well-established leader in this large area, ride a multibillion-dollar franchise in obefazimod, and deliver outstanding returns over the next 10 years.
Read the fine print
Abivax is worth 8.6 billion euros ($10.1 billion). Clinical-stage biotechs worth that much are exceedingly rare. Even with obefazimod's potential, this tells us that at least some of the medicine's success is likely already baked into the stock price. That sets the bar higher for the company's shares to skyrocket over the next 10 years. Further, there are significant risks involved as Obefazimod's stock will drop like a rock if it encounters clinical or regulatory setbacks.
It's essential to keep those things in mind, but for investors who can handle the risk and volatility, it might be worth opening a small position in Abivax.
