One of the great things about equity markets is that you don't need a fortune to get started. Though strong companies that perform well tend to attract plenty of attention that bids up their share prices, it's possible to buy shares of quality stocks with $50 -- or less.
Here are two great examples in the biotech industry: Viking Therapeutics (NASDAQ: VKTX) and Exelixis (NASDAQ: EXEL). These two drugmakers could generate outsized returns to investors who initiate positions now.
1. Viking Therapeutics
Viking Therapeutics, a mid-cap biotech, is looking to make waves in the fast-growing market for weight management medicines. Last year, it reported positive phase 2 results for the subcutaneous formulation of its leading candidate, VK2735. It will move forward with phase 3 studies for this product soon. Meanwhile, Viking Therapeutics is also developing an oral version of its anti-obesity therapy; this formulation recently started phase 2 studies after performing well in a phase 1 clinical trial last year.
The potential for Viking could be large, considering the current weight management leaders' success. Viking's candidate may not need to generate the kind of sales that Wegovy and Zepbound do. However, reaching blockbuster status would be a significant accomplishment for the smaller company. And although the weight loss field is getting crowded, few companies not named Eli Lilly or Novo Nordisk have posted mid-stage results that rival those for VK2735.
Furthermore, Viking has several other exciting candidates. Its investigational medicine for metabolic dysfunction-associated steatohepatitis (MASH), VK2809, also performed well in mid-stage studies. Viking is working on yet another potential weight loss candidate that's still in preclinical studies, showing that the company isn't putting all its eggs in one basket.
Viking Therapeutics is a bit risky since it still doesn't have a single approved product, but it's shown innovative qualities and its shares could skyrocket in the long run if its mid-stage programs pan out. If you're an investor comfortable with volatility, it might be well worth it to initiate a small position in the stock at a price of about $25 per share.
2. Exelixis
The oncology market is one of the industry's largest and most competitive -- the most prominent pharmaceutical companies typically dominate it. However, Exelixis, a relatively small biotech compared to the leaders, is a successful cancer-focused drugmaker. Recent events once again highlight why. On March 26, it announced that Cabometyx, its best-selling product, earned a label expansion in the U.S. in treating advanced neuroendocrine tumors.
Cabometyx has been Exelixis' most significant growth driver for a while, and it continues to grind out new indications that help the biotech generate growing revenue and profits. In 2024, Exelixis' top line increased by a healthy 18.5% year over year to $2.2 billion. The company's adjusted net earnings per share grew by 22% year over year to $2.
Importantly, Exelixis put a significant risk to bed last year. The company had been fighting a legal battle over the potential launch of a Cabometyx generic by MSN Laboratories, a privately held biotech. Exelixis won the battle and won't have to worry about MSN's generics until 2030.
Until then, new and existing indications for Cabometyx will keep revenue going in the right direction -- it remains the top-prescribed medicine of its kind in renal cell carcinoma, by far the most common type of kidney cancer. And it's still undergoing clinical trials, so more label expansions might be coming.
Meanwhile, Exelixis is developing newer medicines, hoping to find another "pipeline in a drug" like Cabometyx. There is a high unmet need in colorectal cancer, since the disease has a low five-year survival rate once it metastasizes. Exelixis is looking to fill this need with zanzalintinib, which is undergoing phase 3 studies in advanced colorectal cancer, among other targets. It also has other programs in early-stage studies.
Between the continuing performance of Cabometyx, Exelixis' pipeline, and the company's ability to navigate the competitive oncology market successfully, you could buy and hold this stock for a long time -- and its shares are trading hands for just under $37 each.
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Prosper Junior Bakiny has positions in Eli Lilly, Exelixis, Novo Nordisk, and Viking Therapeutics. The Motley Fool has positions in and recommends Exelixis. The Motley Fool recommends Novo Nordisk and Viking Therapeutics. The Motley Fool has a disclosure policy.
