Some of the best possible returns for investors come by not going after megacaps, but instead pursuing stocks that have more modest valuations. Mid-cap stocks represent companies valued at between $2 billion and $10 billion. If they give investors a reason to be bullish on their growth prospects or show that they're on the right path, these types of investments can double in value and be 10-baggers in the long run.
To be clear, it doesn't always work out that way, and there are risks with these types of stocks. But if you have some risk tolerance and a long-term investment outlook, three mid-cap healthcare stocks that look promising and could take off this year include Iovance Biotherapeutics (NASDAQ: IOVA), CRISPR Therapeutics (NASDAQ: CRSP), and Viking Therapeutics (NASDAQ: VKTX).
Here's what makes these stocks special buys, and why they might be worth the risk.
1. Iovance Biotherapeutics
Iovance Biotherapeutics has a market cap of $2.3 billion. It started off hot in 2024 after the Food and Drug Administration granted accelerated approval for Amtagvi (lifileucel), which is a cell therapy for unresectable or metastatic melanoma. While the treatment has blockbuster potential and may generate around $1 billion in annual sales, it could take multiple years for that to happen, and it'll ultimately depend on whether it racks up more approvals.
As the company rolls out Amtagvi to markets and potentially posts stronger results this year, there could be some renewed bullishness in the healthcare stock in the months ahead. Iovance was successful in shrinking its losses in the most recent period (which ended Sept. 30), from $113.8 million to $83.5 million. If it can continue to do that and if there are encouraging results from one of its many ongoing clinical trials involving lifileucel, that too could quickly send the stock soaring again.
Shares of Iovance have been falling in recent weeks, but at its high, when investors were bullish early last year, the stock price hit a peak of $18.33. It's down around 60% from that high, and if it releases more positive news again this year, it may not be surprising for it to get back to those levels again.
2. CRISPR Therapeutics
A biotech stock that arguably should already be more valuable than it is today is CRISPR Therapeutics. Its market cap is at $3.6 billion, and despite already racking up a couple of key approvals, this stock has been struggling for multiple months. Last year, it declined by 37%.
CRISPR and its development partner Vertex Pharmaceuticals have obtained approvals for their gene therapy treatment, Casgevy, to treat patients with sickle cell disease and beta thalassemia, a couple of rare blood disorders.
The company has other clinical trials ongoing for other therapies, but Casgevy alone could be a huge catalyst for CRISPR. It will share in profits (taking 40%) with Vertex, but for a treatment that has an enormous list price of $2.2 million, the one-time therapy could be not only a game changer for patients, but for CRISPR's bottom line as well.
It may take a while for the company to show some improved financial results, as a lot will ultimately depend on insurers and their coverage of Casgevy, but if CRISPR's financials do show improvement, that could be the catalyst to get investors excited about the stock and be a sign that the business is on the right path forward. CRISPR has incurred a net loss totaling $240 million over the trailing 12 months, but with brighter days ahead, now may be an optimal time to buy the stock and simply hang on.
3. Viking Therapeutics
One healthcare stock that investors were incredibly bullish on last year was Viking Therapeutics, which soared 116%. At $4.7 billion, it is the most valuable stock on this list, but it still has a lot of upside left. Investors are optimistic about its weight loss drug, VK2735, which, if it obtains approval from regulators, could send Viking's stock parabolic.
The drug has helped people lose about 15% of their body weight, on average, over a period of 13 weeks, based on data from a phase 2 trial. The company is also working on an oral version of the drug.
While Viking doesn't have an approved product just yet, hopes are high that VK2735 could get across the finish line in the near future. Viking could also make for an attractive acquisition target for a larger pharma company that may be looking to add some promising weight loss treatments into its portfolio.
If Viking can even be a small player in the massive $200 billion obesity drug market, the stock could have enormous upside. Nothing is a guarantee, but many investors like the potential the stock possesses, and this can be one of the top healthcare stocks to own this year.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CRISPR Therapeutics, Iovance Biotherapeutics, and Vertex Pharmaceuticals. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.
