Many biotech stocks were riding high this summer, but have plunged in the last few months along with much of the rest of the market.
But for two drugmakers, this selloff looks overblown. And both could prove to be big winners next year with potential blockbuster drugs hitting the market.
Here’s what you need to know about these two stocks.
Viking Therapeutics (NASDAQ: VKTX)
What sets Viking Therapeutics (NASDAQ: VKTX) apart from most biotechs is that the drugmaker has not one, but two potential blockbuster treatments nearing late-stage development.
The first is a hip fracture drug candidate—VK5211—which Viking is seeking a partner for to assist financially with the drug’s expensive late-stage development. Viking is doing this to focus on its other promising candidate, VK2809, a treatment for the fatal liver condition known as nonalcoholic steatohepatitis (NASH).
NASH is expected to be worth upwards of $35 billion annually within the next two years, and there are currently no approved treatments for the disease so those companies that bring a product to market stand to rake in billions.
VKTX stock is down nearly 70% since peaking in September over concerns that the biotech’s NASH treatment is well behind in terms of development compared to its competitors in the space. However, Viking’s VK2809 candidate has demonstrated an arguably superior clinical profile compared to all other experimental competitor treatments of fatty liver disease, and there’s strong promise that these results will extend to the NASH arena.
Considering this, Viking’s sharp pullback may well prove to be unjustified and presents a great buying opportunity for investors interested in jumping into the multibillion-dollar profit opportunity that is NASH.
All analysts covering the stock rate it a Buy and their average twelve-month price target for VKTX is $26.29, indicating possible upside of 260%. Last month, Raymond James upgraded the stock to a Strong Buy and set their price target at $43 – 489% higher than Thursday’s closing price.
Amarin (NASDAQ: AMRN)
Amarin (NASDAQ: AMRN) sparked a flurry of headlines in late September after the company revealed unprecedented results for its prescription omega-3 fish oil pill, Vascepa, in a large cardiovascular trial.
Vascepa showed a 25% relative risk reduction in terms of major adverse cardiovascular events like heart attacks or strokes when taken in addition to a statin in patients with persistently elevated triglyceride levels. No other omega 3 supplement has demonstrated such incredible benefits within a large, placebo-controlled study.
The treatment isn’t likely to start seeing major sales until late in 2019. However, Amarin is planning to begin rolling out educational materials on Vascepa’s clinical results to doctors before a regulatory application is filed, which means the company could start to see sales from off-label prescriptions within the next few quarters.
The company’s management is expecting Vascepa’s sales to eventually top $2 billion per year, which is a huge number considering the drug is currently on-track to generate only about $221 million for all of 2018.
Another big draw for Amarin is that the company’s impressive results with the Vascepa study make the company an attractive takeover target for bigger pharma companies. Amarin shares could see a boost next year from a bidding war for the company, or from organic growth from sales of Vascepa. Either would mean a very interesting year ahead for this stock.
Analysts’ average price target for AMRN is $34.80, suggesting possible upside of 156% over the next twelve months. Last month, HC Wainwright adjusted their price target for the stock up to $51 – 275% above today’s closing price.