Missed Out on Eli Lilly’s 480% Gains Over the Past 5 Years? These GLP-1 Stocks Still Have Plenty of Upside.

Eli Lilly (LLY -0.66%) has been one of the hottest healthcare stocks to own in recent years, thanks in large part to the success of its incredibly successful GLP-1 agonist drugs, which help patients with diabetes and weight loss. In five years, the stock has soared by close to 480%, which would have turned a $20,000 investment into approximately $116,000.

The GLP-1 market is still in its early growth stages, and there’s plenty of room for more companies to make names for themselves. While Eli Lilly is a safe bet to invest in right now, if you want a position in stocks that may have considerably more upside in the GLP-1 market, there are two names you should take a closer look at today: Viking Therapeutics (VKTX -0.60%) and Altimmune (ALT 0.43%).

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Viking Therapeutics

The big excitement surrounding Viking is it has a GLP-1 treatment that could be a viable option for weight loss. VK2735 isn’t an approved treatment yet, but it has been showing encouraging results in early-stage trials.

In data released last year, a phase 2 trial showed that the drug was able to help patients lose up to 14.7% of their body weight after 13 weeks, without signs of any plateau, suggesting further weight loss could be possible. Phase 3 trials are set to begin this year.

Meanwhile, Viking is also working on an oral version of the treatment, which is currently in phase 2 trials. The phase 1 data from that looked solid, with trial participants losing up to 8.2% of their body weight after 28 days.

The risk with Viking is that it isn’t generating revenue today, and it doesn’t have any approved products. It has incurred a net loss totaling $128 million over the trailing 12 months, and there’s a real possibility that those losses could deepen as it spends more on clinical trials. If VK2735 isn’t successful and doesn’t obtain approval from regulators, the stock could nosedive, which is the biggest concern for investors.

Investors have largely looked past Viking this year, as the healthcare stock is down 35% (as of June 13), pulling its market cap down to less than $3 billion. However, if there’s encouraging clinical data to come out in the future, that could trigger a rally in Viking’s stock. This is a company that has a lot of upside, and if you’re OK with taking on some risk, this may be a good stock to invest a modest amount of money into.

Altimmune

Altimmune is similar to Viking, but it’s much smaller in market capitalization, worth less than $600 million. It hasn’t been as popular of an option for investors, but it’s an investment that may have even greater upside, given its more modest valuation. It also has a promising GLP-1 product that investors are bullish on: pemvidutide.

In a phase 2 trial, participants lost an average of 15.6% of their body weight after a period of 48 weeks on the highest dosage (2.4 mg). The company doesn’t have an oral version in development, but it is also testing pemvidutide as a treatment for other conditions, including metabolic dysfunction-associated steatohepatitis, alcohol use disorder, and alcohol liver disease.

Altimmune generates limited revenue (primarily coming from grants and contracts), and until and unless it obtains approval for pemvidutide, that’s likely to stay this way. Over the past four quarters, its losses have totaled $90 million, and it has burned through more than $80 million just from its day-to-day operating activities. With around $150 million in cash and short-term investments, it’s adequately funded, but there is high likelihood of share offerings being necessary in the future, and dilution is a real concern for investors.

If pemvidutide becomes a success, Altimmune could easily double or triple in value and potentially be an acquisition target for a larger healthcare company seeking opportunities in GLP-1. There’s risk with Altimmune, but there could also be tremendous upside. If you can stomach the uncertainty, you may want to consider taking a chance on the stock.