These biotechnology stocks could substantially outshine the overall market.
The growth stocks are on a remarkable upward trajectory in 2023. Illustrating this, growth-centric funds such as ARK Innovation ETF and Vanguard Growth ETF have greatly surpassed the market performance this year.
Which growth stocks are worthy of investment currently? This month, I am considering expanding my growth portfolio with Roivant Sciences (NASDAQ: ROIV) and Viking Therapeutics (NASDAQ: VKTX). Here are the reasons.
Roivant Sciences: An Innovative Drug Development Strategy
Roivant operates as a commercial-stage biotech company, developing drugs through its unique ” Vants ” divisions.” The company reached a significant milestone in 2022, obtaining approval from the Food and Drug Administration for its special psoriasis treatment, Vtama cream. Roivant also boasts several other promising drug candidates in immunology and inflammation, presenting substantial unmet medical requirements and commercial opportunities.
Roivant’s most compelling candidate in its pipeline is RVT-3101, a dual inhibitor for inflammation and fibrosis, developed by its subsidiary Telavant for Inflammatory Bowel Disease (IBD). IBD, a chronic and crippling disease, significantly affects the life quality of millions globally.
The existing IBD treatments often fall short, have severe side effects, or lose their efficacy over time, creating considerable demand for new, improved therapies targeting the disease’s root causes and providing lasting relief.
Roivant acquired the license for RVT-3101 from Pfizer in late 2022. Since then, the drug has shown tremendous potential in clinical trials, paving the way for an imminent critical trial in ulcerative colitis (UC). The drug has also reportedly sparked acquisition interest from pharmaceutical giant Roche. Besides UC, RVT-3101 is expected to provide mid-stage data on Crohn’s disease by the end of 2024.
Why invest in Roivant?
Roivant offers several value drivers, but RVT-3101 is expected to be a leading player shortly. Given the high activity in biopharma surrounding IBD and RVT-3101’s potential as a top treatment, Roivant’s market capitalization of $9 billion seems undervalued, especially considering its pipeline targeting a host of high-value opportunities.
Viking Therapeutics: A Potential Diamond in the Rough
Viking Therapeutics is a clinical-stage biotech company specializing in metabolic and endocrine disorders. The company’s stock has been in high demand this year due to its promising weight loss and nonalcoholic steatohepatitis (NASH) drug candidates, VK2735 and VK2809, respectively.
Though analysts’ predictions vary, both these experimental treatments have the potential to achieve mega-blockbuster status, raking in over $5 billion in annual sales by mid-decade. This revenue forecast is exciting for a company with a current market capitalization of $1.4 billion.
Why consider Viking?
Viking might be one of the most underestimated stocks in the market at the moment. The projected annual sales for weight loss drugs are over $40 billion by the end of the decade, and NASH treatments are anticipated to generate over $30 billion in annual sales by 2035.
What’s the risk factor?
As a clinical-stage biotech company, Viking could face possible failures, regulatory hurdles, and delays in commercialization. They also aim to break into two of the most competitive areas in biopharma, indicating that the competition could be intense in both segments.
Roivant Sciences and Viking Therapeutics are enticing options for growth-oriented investors this August. The innovative approaches to drug development and the high market potential of their respective pipeline candidates make these stocks worthy of consideration. However, as with all investments in the biotech sector, it’s vital to consider the inherent risks associated with clinical-stage companies. Therefore, these investments should suit those with a higher risk tolerance seeking to enhance their growth portfolio. Both companies have promising prospects and could provide significant returns in the future.
