3 Under-the-Radar Stocks to Buy and Hold for a Decade
Written by Prosper Junior Bakiny for The Motley Fool -> These three innovative biotechs are developing products in markets with high unmet needs. They could offer excellent returns provided they can make solid clinical and regulatory progress. It isn't only the most popular st
These three innovative biotechs are developing products in markets with high unmet needs.
They could offer excellent returns provided they can make solid clinical and regulatory progress.
It isn't only the most popular stocks that deliver strong returns. There are plenty of little-known corporations with attractive prospects that can be great additions to a well-diversified portfolio for investors who take the time to find them. In that spirit, let's consider three under-the-radar companies that are worth a second look right now: Madrigal Pharmaceuticals (NASDAQ: MDGL) , Axsome Therapeutics (NASDAQ: AXSM) , and Kailera Therapeutics (NASDAQ: KLRA) . These three biotechs could offer attractive returns over the next decade.
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Madrigal Pharmaceuticals made history in 2024 when it earned approval for Rezdiffra, the first medicine for metabolic dysfunction-associated steatohepatitis (MASH). There was a dire need for a treatment for MASH when Madrigal first entered the field: Millions of patients in the U.S. alone suffer from the disease. Sure enough, Madrigal Pharmaceuticals has made significant headway in this market. As of March 31, more than 42,250 patients were being treated with Rezdiffra. Madrigal Pharmaceuticals' first-quarter revenue increased by 127% year over year to $311.3 million, driven by Rezdiffra, the company's only approved medicine.
Yet, the biotech company still has a large addressable market. Madrigal Pharmaceuticals is targeting about 315,000 MASH patients who are being seen by specialists. It still has a long way to go before capturing even 50% of this addressable opportunity. Further, Madrigal Pharmaceuticals has a pipeline of additional assets that will address the needs of even more MASH patients.
The company could make significant progress in this niche over the next decade while delivering solid top-line growth. There are some risks, including increased competition. Novo Nordisk also earned approval for a medicine for MASH last year. There will be more brand-new market entrants in the future. Further, Madrigal Pharmaceuticals could encounter clinical or regulatory setbacks that might sink the stock. But even with these caveats, the company's leading product, strong pipeline, and first-mover advantage in this niche could allow it to deliver excellent returns over the next 10 years.
Axsome Therapeutics has several products in its portfolio that are driving solid top-line growth. The list includes Auvelity, a depression medicine that is its main growth pillar. In the first quarter, Axsome Therapeutics' top line increased by 57% year over year to $191.2 million. Auvelity's sales came in at $153.2 million, 59% higher than the year-ago period. Here's the great news: Auvelity just earned a label expansion for the treatment of Alzheimer's disease agitation.
