Small, highly innovative drug companies that are trying to treat widespread diseases have tremendous potential. Their value can easily increase ten-fold.

However, such drug companies also pose tremendous risk. If one or more of their drugs fail in clinical trials, they could go bankrupt, making their stocks worthless. And of course, it’s very difficult for investors to assess a drug’s chance at succeeding.

Nonetheless, I believe that there are ways to minimize the risks. If a drug company has already reported positive clinical data for one or more of its treatments, those treatments have a much greater chance of receiving U.S. Food and Drug Administration approval. And if a drug has already been approved as a treatment for one disease, there’s a very good chance that it will be approved as a treatment for other illnesses.

Moreover, I believe that small companies that have received validation from experts are a much safer bet than those that haven’t. If a huge investor puts hundreds of millions of dollars into a drug company, that investor has probably consulted with top experts who have carefully analyzed all of the company’s available data. Similarly, if a large drug company spends time or money on partnering with a much smaller pharma firm, the large company’s experts probably believe that there is an excellent chance that the small company succeeds.

Clinical trials have greatly lower the risks of Moderna (NASDAQ:MRNA), vTv Therapeutics (NASDAQ:VTVT) and GW Pharmaceuticals (NASDAQ:GWPH). Plus, these companies have rceived FDA approvals, huge investments and big partnerships.

Nonetheless, MRNA, VTVT and GWPH stock all have market capitalizations of less than $7 billion. And all three can easily surge ten-fold within a decade.

Let’s take a look at each of these drug stocks to buy now.

Drug Stocks to Buy: Moderna (MRNA)

Market Capitalization: $6.7 billion

Moderna focuses on developing vaccines and treatments based on messenger RNA, or mRNA. What exactly is mRNA? It carries information from the DNA, eventually making its way to the ribosomes. From there, it helps develop proteins, including a type of disease-fighting proteins known as antibodies. And according research by professors Lien Van Hoecke and Kenny Roose at the University of Ghent’s Center for Medical Biotechnology, it’s much more effective to develop mRNA than antibodies themselves.

Moderna has reported positive Phase 1 data for its vaccine for cytomegalovirus (CMV) — a type of herpes that causes birth defects. About 25,000 newborns contract the disease each year in the U.S., and there are no available vaccines for it.

Interim data shows that those taking the treatment was able to induce “high levels of durable immune responses.” The company indicated that it thinks the vaccine will immunize more than 50% of the individuals who receive it against the disease.

In August, the FDA gave fast-track status to a Zika vaccine the company is also developing, indicating that the agency sees great potential in the treatment. Moreover, the U.S. government is helping to fund the Phase 1 trials of the vaccine, further showing that Washington has high hopes for it.

Moderna is also developing five personalized cancer vaccines that would target tumors at the individual level. It’s enrolling melanoma patients in a Phase 2 trial and working with Merck (NYSE:MRK) on another cancer treatment.

Additionally, Moderna is partnering with the National Institute of Health to develop a “promising” vaccine. And Morgan Stanley’s Matthew Harrison is upbeat on MRNA stock, saying that the company can make a coronavirus vaccine relatively quickly.

Finally, Flagship Pioneering had shares of MRNA stock worth over $936 million as of Sept. 29.

vTv Therapeutics

Market Capitalization: $140 million

This company has developed two drugs that have great chances of becoming blockbusters.

One, a treatment for Type 1 diabetes, activates glucokinase — the body’s glucose sensor — in the liver. This treatment doesn’t activate sensors in the pancreas and doesn’t interrupt the normal work of glucokinase. Insulin is currently the only FDA-approved treatment for the 1.5 million people in the U.S. who have Type 1 diabetes.

In June 2019, the company reported positive results for the first part of a Phase 2 trial of the drug. Specifically, vTv disclosed that 19 patients treated with the drug had shown a statistically significant reduction of blood sugar levels.

The company  expects to report data on the second part of its Phase 2 study, in which 85 patients are participating, later this month.

VTVT is also testing a drug for treating dementia in diabetes patients. The drug, Azeliragon, blocks the body from producing the receptor for advanced glycation endproducts (RAGE) which has been identified as a cause of Alzheimer’s.

The company says there are “well-established associations” between diabetes and RAGE production. It believes that limiting RAGE production will result in less brain degradation and inflammation in diabetes patients. In one study, patients receiving Azeliragon showed less signs of brain inflammation and brain atrophy. Results from the Phase 2 trial should come in early 2021.

And as of early January, billionaire Ronald Perelman owned 31.6 million shares of VTVT stock.

GW Pharmaceuticals

Market Capitalization: $3.5 billion

As I noted in a previous column, GW has developed a drug which is based on compounds within cannabis called cannabinoids. These compounds do not produce a high. The FDA approved Epidiolex in 2018 for treating seizures associated with two rare childhood forms of epilepsy, Dravet Syndrome and Lennox-Gastaut syndrome.

The treatment generated $296 million in revenue for 2019.

In September, the European Union approved Epidiolex, and it is expected to be launched in the United Kingdom, Spain and Italy early this year.

The company submitted an application Feb. 3 with the FDA, seeking approval for Epidiolex to be used in treating seizures associated with tuberous sclerosis. The company is also conducting Phase 3 clinical trials on the use of Epidiolex for the treatment of seizures associated with Rett syndrome and infantile spasm.

Given all of these positive catalysts, I expect sales of the drug to surge tremendously in coming quarters and years. And Pharmaceutical Technology estimates that sales could exceed $1.9 billion in 2025. As the company looks to begin testing other treatments, it’s clear good things are around the corner for GW Pharmaceuticals.

As of this writing, Larry Ramer owned shares of VTVT.