In This Article:
Key Points
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Viking Therapeutics has a promising pipeline candidate in the fast-growing therapeutic area of weight loss.
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Madrigal Pharmaceuticals markets the only approved therapy for a disease whose prevalence is growing.
Investing in promising companies before their stock prices soar is an excellent recipe for earning life-changing returns. However, with hundreds of companies vying for investors' attention, separating the wheat from the chaff can be challenging.
Recognizing those corporations with long-term market-beating potential -- especially before they are well-established -- isn't easy, but let's give it a shot anyway. Consider two mid-cap biotechs: Viking Therapeutics (NASDAQ: VKTX) and Madrigal Pharmaceuticals (NASDAQ: MDGL). These two drugmakers could grow in prominence in the next decade and deliver superior returns.
1. Viking Therapeutics
Viking Therapeutics became famous in the biotech world last year after announcing positive phase 2 results for VK2735, an investigational GLP-1 weight loss candidate. The stock has not performed well since, which we can attribute to several factors.
First, longtime investors took the opportunity to cash in on its big jump. Second, Viking hasn't had any clinical update as significant as that since. Third, like most other corporations, the drugmaker is suffering from marketwide issues.
However, the bullish case for Viking is straightforward. The company could develop successful medicines in areas with unmet or growing needs. VK2735 has produced phase 2 data that rivals almost any other anti-obesity candidate outside those being developed by the leaders in the field, Eli Lilly and Novo Nordisk.
Then there's VK2809, a promising candidate for metabolic dysfunction-associated steatohepatitis (MASH). Because obesity is a major risk factor for MASH, there's a significant need for therapies to address the condition. There is only one medicine approved by the U.S. Food and Drug Administration (FDA) for this disease, so there's room for others. VK2809, like VK2735, should make more progress this year.
Elsewhere, Viking is developing VK0214 to treat X-linked adrenoleukodystrophy (X-ALD), a rare genetic nervous-system disorder. There are ways to manage X-ALD symptoms, but there is no disease-specific FDA-approved treatment. VK0214 has earned the orphan drug designation from the agency, which is reserved for therapies in development that have shown promising clinical evidence in treating rare diseases.
So Viking's pipeline looks promising, and we haven't even mentioned the company's oral version of VK2735. True, the stock is somewhat risky, as are all clinical-stage biotech companies. However, if enough things go Viking's way, it could generate monster returns in the next decade as it earns approval for key products and starts generating strong revenue. In my view, initiating a small position in the stock is worth it.