Godzilla and King Kong surely weren't born big. They began small and grew over time to their gargantuan sizes even if the movies don't tell their childhood stories.
Likewise, huge companies of today were once much smaller (unless perhaps they were spin-offs). Investors who spotted them early had opportunities to make fortunes.
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Can you still find such monsters in the making? Three Motley Fool contributors think so. Here's why they think biotech stocksCRISPR Therapeutics(NASDAQ: CRSP), Summit Therapeutics(NASDAQ: SMMT), and Viking Therapeutics(NASDAQ: VKTX) could become much larger.
An underrated stock with two approvals under its belt
David Jagielski(CRISPR Therapeutics): If you're looking for stocks with mammoth upside, you might be tempted to look for risky stocks that don't have any approved drugs or treatments yet. But with CRISPR Therapeutics, you already have a stock that has an approved treatment -- it simply isn't far along in its rollout.
In December 2023, regulators approved Casgevy, which is a gene-editing therapy the company has been developing with Vertex Pharmaceuticals. It was approved as a treatment for sickle cell disease for patients 12 years and older. Then, a month later, it was also approved to treat people with transfusion-dependent beta-thalassemia (for the same age group). Casgevy can be a game changer for patients with these rare blood disorders as it is a one-time functional cure.
CRISPR will share in the profits with Vertex on Casgevy (collecting 40% of them), which could potentially help the company get to profitability. Currently, its operations are well funded with CRISPR reporting more than $1.9 billion in cash and marketable securities as of the end of September. For a business that has burned through $92.7 million in cash over the past nine months, that can provide it with a lot of runway and time to grow its operations and work on other treatments in its pipeline.
At a modest market cap of just $4 billion, there's a lot of room for CRISPR to get a whole lot more valuable in the future as it scales its operations and Casgevy starts to generate revenue. Buying the healthcare stock now can be a great move for long-term investors.
Already showing monster potential
Keith Speights (Summit Therapeutics): It's practically unheard of for a company with no product on the market to have a market cap of $14 billion. But Summit Therapeutics is no ordinary company.
The drugmaker in-licensed cancer immunotherapy ivonescimab in January 2023. That has turned out to be a brilliant move in retrospect. Earlier this year, Akeso (which originally developed ivonescimab) announced the drug beat Merck's blockbuster immunotherapy Keytruda in a head-to-head late-stage study targeting non-small cell lung cancer (NSCLC).
How big of a deal was this news? Consider that Keytruda was the world's best-selling drug last year, raking in sales of around $25 billion. Summit owns the commercial rights in the U.S., Canada, and Europe of a cancer immunotherapy that could be even more powerful than Keytruda.
Granted, Summit can't ride on the clinical success achieved by Akeso. The company must conduct its own clinical studies to hopefully win approval for ivonescimab in the U.S. and elsewhere. However, that's exactly what it's doing with initial results expected from a late-stage study of the immunotherapy as a second-line treatment for NSCLC in mid-2025. Summit is also evaluating ivonescimab in another late-stage trial as a first-line treatment for NSCLC.
Wall Street's consensus is that Summit's share price could soar more than 40% over the next 12 months. I'm not sure if this price target will be achieved, but it wouldn't surprise me if that's an overly pessimistic goal assuming the company announces positive clinical results next year.
Summit Therapeutics is already showing monster potential. I suspect it will fulfill that potential if ivonescimab wins U.S. regulatory approval.
You can still get in on the ground floor
Prosper Junior Bakiny (Viking Therapeutics): Weight-loss management is the hottest therapeutic area in the pharmaceutical industry right now. Although the companies dominating the field are the usual suspects, a notable mid-cap biotech called Viking Therapeutics is looking to make waves in this market. Viking's lead anti-obesity candidate, VK2735, reported excellent results in phase 2 studies.
It might still be a few years until VK2735 earns regulatory approval, but Viking Therapeutics is not a one-trick pony. The company is working on an oral version of VK2735 -- something many patients would choose over the weekly injections the original formulation comes with. Furthermore, Viking Therapeutics has another promising weight-loss candidate in preclinical studies.
And I have yet to mention the drugmaker's VK2809, an investigational medicine for metabolic dysfunction-associated steatohepatitis -- a liver disease with obesity as a risk factor -- and Viking's VK0214, an investigational therapy for a rare nervous system disease called X-linked adrenoleukodystrophy. Many smaller drugmakers tend to hyperfocus on a single medicine, a strategy that allows them to avoid spreading their resources thin. Viking Therapeutics, though, is taking a different approach.
The company is showing signs of one of the most critical factors successful biotechs need: innovation. There are still risks involved here. Viking's late-stage studies for VK2735 could flop. However, the company is looking increasingly attractive. In a decade, it could join the ranks of highly successful drugmakers. It's not too late to get in on the ground floor.
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David Jagielski has no position in any of the stocks mentioned. Keith Speights has positions in Vertex Pharmaceuticals. Prosper Junior Bakiny has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends CRISPR Therapeutics, Merck, Summit Therapeutics, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
