Investing in Promising Biotech Stocks: A Look at Viking Therapeutics and Recursion Pharmaceuticals

Biotech Stocks with High Growth Potential

These stocks are very promising, but it's important to consider the downside, too. Things aren't so bad for investors right now. We are in a bull market even though the economy is still having some problems. However, this bull run won't last forever. There will be a slowdown, equities will fall, and many won't deliver anything approaching decent returns for years after.

Viking Therapeutics

Viking Therapeutics is on a roll. The biotech, whose market capitalization is just under $8 billion as of this writing, is a bit of a David going after two Goliaths. Its leading asset is VK2735, and in a phase 2 study, VK2735 showed meaningful weight reduction among obesity patients at every dose level. Viking Therapeutics is also developing an oral version of VK2735. More positive results could jolt the stock price. If Viking Therapeutics manages to pass every clinical and regulatory obstacle ahead and launches these products, the stock will skyrocket.

Recursion Pharmaceuticals

The biotech uses artificial intelligence (AI) to power an operating system with a vast biological database to test how various clinical compounds interact with the human body. The cost savings over many years and multiple medicines launched could be enormous for the biotech. If the company is successful, it would be a significant paradigm shift for the entire industry. Recursion and its shareholders will reap massive benefits.

Despite Viking Therapeutics' solid phase 2 results for VK2735, there is no guarantee of a successful late-stage clinical trial. Meanwhile, though Recursion's approach looks promising, there is little evidence -- at least so far -- that it can produce the kind of progress the company hopes to achieve. That said, both stocks will appeal to aggressive investors, and even then, it's best to start by initiating a small position and adding more progressively when (if!) these two biotechs prove their worth.