Investing in biotech stocks is a fantastic way to grow your money over time. This is because in the early days of these companies' growth stories, their stock prices often remain accessible -- and if their research is successful and produces one or more important products, share prices could explode higher. So it's very possible to get in on a promising biotech stock for $100 or less, hold on for the long term, and watch the value of your investment soar.
With the vast number of biotech companies out there, though, it may seem difficult to select tomorrow's potential winner. Before making a choice, it's important to consider a few factors: the strength of the company's pipeline, the therapeutic areas it addresses, and its financial situation. Let's take a look at a biotech that wins on all of these points and more -- a stock you can buy with $100 right now.
Image source: Getty Images.
One of today's hottest markets
Let's start out with the therapeutic areas addressed. It's key to consider the revenue potential of a company's leading program, along with the competitive landscape. High-growth markets and those with significant demand are ideal -- and this particular company is in one of today's (and tomorrow's) hottest.
I'm talking about Viking Therapeutics (NASDAQ: VKTX) , a company developing treatments for obesity. Viking's candidates are dual GIP/GLP-1 receptor agonists, acting on these hormones involved in the digestion process to control blood sugar levels and appetite. The company has shepherded its injectable candidate through phase 2 and is preparing to progress into phase 3. Viking also is working on a pill form, and this candidate, after a successful phase 1 study, is set to enter phase 2 later this year.
The injectable in phase 2 showed up to 15% reduction in body weight over a period of 13 weeks, while the pill format in its phase 1 showed as much as a 5.3% reduction after just 28 days of dosing.
Viking isn't alone in the space, and won't even be first to commercialize such a product -- today, treatments by big pharma players Eli Lilly and Novo Nordisk dominate the market. But this young biotech company still could carve out share and deliver significant growth to investors. There are two reasons.
Demand surpasses supply
Demand has been so high for the Lilly and Novo Nordisk weight loss drugs that it's surpassed supply. The U.S. Food and Drug Administration placed these drugs on its shortage list about two years ago -- and only recently removed Lilly's from the list after the company ramped up manufacturing. This trend suggests there's room for more than one or two players to generate significant sales in the market.
On top of this, the obesity drug market is growing quickly, with Goldman Sachs Research predicting it may increase more than 16-fold to reach $100 billion by the end of the decade.
Another way Viking and its shareholders could win is if a bigger player offers to buy the company, as a way to get in on the valuable and high-growth market for weight loss drugs. Viking is in the late stages of development with its injectable candidate, meaning it's passed many of the earlier-stage risks and is getting close to commercialization. That could make it an attractive target.
Widening the revenue possibilities
Next, it's important to note that Viking is also studying candidates in nonalcoholic steatohepatitis (NASH, a fatty liver disease) and in the genetic nervous-system disorder X-linked adrenoleukodystrophy (X-ALD). The X-ALD candidate recently delivered positive results in a phase 1b trial. The company's focus on this rare disease as well as NASH broadens its potential revenue opportunities
Finally, Viking's cash position of more than $900 million puts it in a position of strength, with the ability to fund the advancement of its programs.
Viking shares also are very reactive to news from the pipeline. When the company first announced positive results from the injectable weight loss candidate back in February, the stock soared by about 120% in one trading session. It's since slipped 26% from that point and has settled at about $60 a share, offering you the opportunity to get in on this player with less than $100.
If Viking's weight loss portfolio continues to progress smoothly, this biotech stock could be heading for more outsized gains over the long haul .
Should you invest $1,000 in Viking Therapeutics right now?
Before you buy stock in Viking Therapeutics, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Viking Therapeutics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,130 !*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
See the 10 stocks »
*Stock Advisor returns as of October 7, 2024
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy .
Local News
Comments / 0