GH - 3 Biotech Moonshots With Imminent Catalyst Potential

2024-07-03 11:11:00 ET

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For most of the year, biotech has been one of the most explosive sectors on the market. Far from over, further upside is likely, thanks to some of the top biotech stocks with catalysts.

Look at the iShares Nasdaq Biotech ETF (NASDAQ: IBB ) , for example. Since last year, the ETF ran from a low of about $110 to a high of $140. Even the SPDR S&P Biotech ETF (NYSEARCA: XBI ) popped from a low of about $65 to a high of $91.36.

All thanks to newer innovation, demand for better treatment, pharmaceutical companies strengthening pipelines, a resurgence of M&A, and an unstoppable obesity treatment boom that’s showing no signs of cooling.

Even better, Goldman Sachs says the obesity market will reach $100 billion by 2030 . And, according to Morgan Stanley , the global market for obesity drugs could increase more than 15-fold by 2030.

With substantial growth ahead, here are three biotech stocks with catalysts you may want to buy today.

Viking Therapeutics (VKTX)

About a year ago, I first mentioned Viking Therapeutics (NASDAQ: VKTX ) as it traded at $22 a share. After watching it rally to about $100, it pulled back to $51.

And it’s still a strong buy opportunity. For one, the company reported that the injectable form of its treatment helped patients lose up to 13.1% of their weight after 13 weeks in Phase 2 trials . The company also said the oral form of its treatment led to a weight loss of about 3.3% after 28 days in Phase 1 trials. Now, thanks to the success of Phase 1, the company has plans to initiate its Phase 2 oral drug trials later this year.

Helping, Morgan Stanley just initiated coverage of VKTX with an outperform rating, with a price target of $105. All thanks to promising Phase 2 data for VKTX2735 and VK2809 for the treatment of obesity and NASH, respectively.

“The firm’s analyst pointed out that the two drug candidates are poised to tap into blockbuster market opportunities. The anticipation of near-term updates on these drugs is expected to contribute to further upside for Viking Therapeutics,” says Investing.com .

Guardant Health (GH)

Another one of the top biotech stocks with catalysts is Guardant Health (NASDAQ: GH ), which just ran from a low of about $22 to $28.87.

Helping, a US FDA advisory panel found that there is “ reasonable assurance ” GH’s Shield blood test for colorectal cancer screening is effective.

That now paves the way for potential US FDA approval later this year. Better, once the US FDA does approve it, “it will be the first approved blood screening test for colorectal cancer that meets requirements for Medicare reimbursement,” says CNN . It would become the second blood-based test for colon cancer diagnosis in the U.S.

Also, while a colonoscopy is typically recommended, adherence is low because of the invasiveness of the procedure. And while we also have access to Cologuard, blood tests are considered to be easier.

In addition, as noted by Guardant Health , “Current primary non-invasive screening options include stool-based tests which have proven efficacy in detecting CRC; however, studies have consistently found that barriers such as handling stool and challenges performing the test impact adherence.”

With approval likely later this year, Guardant Health is a strong buy.

Adaptimmune (ADAP)

On August 4, the U.S. FDA is set to rule on Adaptimmune’s (NASDAQ: ADAP ) Afami-cell for the treatment of advanced synovial sarcoma, which could be a substantial catalyst.

At the moment, according to Adrian Rawcliffe , Adaptimmune’s Chief Executive Officer:

“We are making great progress preparing for the commercial launch of afami-cel on approval. Behind afami-cel, we plan to launch lete-cel for synovial sarcoma and MRCLS [Myxoid/round cell liposarcoma] in 2026 with projected peak US sales of $400 million for our sarcoma franchise.”

Helping, analysts at Scotiabank initiated coverage of ADAP with a $3.15 price target.

The firm recommends buying ADAP on the “imminent” commercial launches of its afami-cel and lete-cel for synovial sarcoma and myxoid/round cell liposarcoma. They also believe US FDA approval could happen by this summer.

A buy at its current price of $1.05, I’d like to see ADAP initially retest $1.80 near-term.

On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .

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