2 Stocks That Could 10x by 2035
Things aren't so bad for investors right now. We are in a bull market even though the economy is still having some problems. However, this bull run won't last forever. There will be a slowdown, equities will fall, and many won't deliver anything approaching decent returns for years after.
So it's important to find stocks that can beat the market (hopefully by a large margin) over the long run. That's not easy to do, but here are two stocks in the biotech industry to look at: Viking Therapeutics (NASDAQ: VKTX) and Recursion Pharmaceuticals (NASDAQ: RXRX). These mid-cap companies are innovative in their unique ways. Let's find out more.
Viking Therapeutics
Viking Therapeutics is on a roll. The biotech, whose market capitalization is just under $8 billion as of this writing, is a bit of a David going after two Goliaths.
It is developing an anti-obesity medicine, an area dominated by two of the largest pharmaceutical companies in the world, Novo Nordisk and Eli Lilly. Many drugmakers are trying to challenge this near duopoly, but among the several giants in the industry dipping their toes in these waters, none have produced better clinical trial results than Viking Therapeutics.
Its leading asset is VK2735, and the only medicine on the market of this kind is Eli Lilly's weight-loss treatment Zepbound. In a phase 2 study, VK2735 showed meaningful weight reduction among obesity patients at every dose level, with the higher doses generally leading to greater weight loss. Viking Therapeutics is also developing an oral version of VK2735.
Here's why that's important. Eli Lilly's Zepbound and Novo Nordisk's Wegovy are weekly injections. Many people would rather take a pill, or at least they would like to have the option. If Viking can develop an effective oral anti-obesity medicine along with an injectable one, that will be a big deal.
Viking has another promising phase 2 program inching toward a data readout. The candidate in question is VK2809, a potential treatment for the liver ailment non-alcoholic steatohepatitis. The biotech expects to release some results from this ongoing study during the second quarter.
More positive results could jolt the stock price. If Viking Therapeutics manages to pass every clinical and regulatory obstacle ahead and launches these products, the stock will skyrocket. Under this scenario, the biotech could indeed 10x in the next 10 years.
2. Recursion Pharmaceuticals
The biotech industry seems to be proving that the drug development process is becoming slower and more expensive despite improvements and advancements in science and technology. Recursion Pharmaceuticals is trying to change that.
The biotech uses artificial intelligence (AI) to power an operating system with a vast biological database to test how various clinical compounds interact with the human body. The goal is to find promising compounds to advance to clinical trials and raise the return on investment of preclinical research, which is currently very low.
Most compounds that enter phase 1 studies never make it to the market. Meaningfully raising the success rate of new compounds would be a massive improvement that would allow Recursion Pharmaceuticals to spend less money on preclinical research.
The cost savings over many years and multiple medicines launched could be enormous for the biotech. It would also have the option of licensing its operating system to other biotechs for quite a bit of money.
In this sense, Recursion Pharmaceuticals is as much a tech company as a biotech. If the company is successful, it would be a significant paradigm shift for the entire industry. Recursion and its shareholders will reap massive benefits.
Read the fine print -- carefully
So, should investors rush to buy shares of Viking and Recursion? Not so fast! Yes, both stocks unquestionably have the potential to 10x in the next 10 years. But these biotechs could also offer no real returns in that period.
Despite Viking Therapeutics' solid phase 2 results for VK2735, there is no guarantee of a successful late-stage clinical trial. Failure to continue impressing investors will sink the company's stock price.
Meanwhile, though Recursion's approach looks promising, there is little evidence -- at least so far -- that it can produce the kind of progress the company hopes to achieve. Recursion has several candidates in phase 2 testing, none in phase 3, and we have no idea whether these will ever earn approval.
That said, both stocks will appeal to aggressive investors, and even then, it's best to start by initiating a small position and add more progressively when (if!) these two biotechs prove their worth.
Should you invest $1,000 in Viking Therapeutics right now?
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
