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Viking Surges 342% in the Past Year: How Should You Play the Stock?
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Shares of Viking Therapeutics (VKTX - Free Report) have more than tripled in market value in the past year. The upside was triggered by positive updates on its pipeline programs for obesity and non-alcoholic steatohepatitis (NASH) indications.
Based on the encouraging results, management intends to meet with the FDA to discuss the late-stage study design and timings for both programs.
In the past year, the stock has significantly outperformed the industry’s 2.5% decline. The stock has outperformed the sector and the S&P 500 during the same period. VKTX’s shares are also trading above the 50-day and 200-day moving averages.
VKTX Stock Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Let’s take a brief look at the factors governing the company’s prospects.
Market Potential for VKTX’s Drug in the Obesity Space
The obesity market has garnered much interest lately, with two companies — Eli Lilly (LLY - Free Report) and Novo Nordisk (NVO - Free Report) — dominating this space with their respective obesity drugs Zepbound and Wegovy. Despite having approved drugs in this space, LLY and NVO have been unable to cope with existing demand.
Per research conducted by Goldman Sachs, the obesity market in the United States is expected to reach $130 billion by 2030. This is also evident from the fact that Lilly and Novo are investing heavily to optimize their production capacities and have started evaluating multiple other novel obesity candidates.
Viking is one of the few biotech stocks that has shown immense potential in this space. The company is developing VK2735 as a subcutaneous (SC) injection and as an oral pill in a mid-stage study and an early-stage study, respectively. The drug has shown blockbuster potential, having demonstrated superior weight-reduction capabilities in clinical studies.
In February, management reported that the phase II VENTURE study, which evaluated the SC formulation of VK2735, achieved its primary and all secondary endpoints with statistical significance. Patients treated with the SC formulation achieved a mean weight reduction of 14.7% after 13 weeks compared with 1.7% in the placebo group. In March, the company reported data from the early-stage study on the oral formulation of the drug, which demonstrated promising dose-dependent reductions in mean body weight after 28 days of daily dosing.
Before 2024-end, management plans to meet with the FDA to discuss the late-stage study design on the SC formulation of VK2735 and also start a mid-stage study on the oral formulation.
VKTX’s NASH Drug Shows Promise
Viking Therapeutics recently completed the VOYAGE study, which evaluated VK2809 as a potential treatment for patients with biopsy-confirmed NASH.
The study achieved its secondary endpoints of histologic changes assessed by hepatic biopsy after 52 weeks of treatment with VK2809 when compared with placebo. Overall, 40-50% of patients who received VK2809 achieved NASH resolution(meaning the disease symptoms disappeared) and at least a one-stage improvement in fibrosis. In contrast, only 20% of patients who received a placebo achieved similar results. The study previously achieved its primary endpoint — patients who received VK2809 achieved a statistically significant reduction in liver fat content following 12 weeks of treatment.
VKTX intends to meet with the FDA in fourth-quarter 2024 to discuss the VOYAGE study results before making decisions on the program.
Unlike the obesity space which has already demonstrated immense market potential, the NASH space is relatively very new. Currently, there is only one marketed drug in this space — Madrigal Pharmaceuticals’ (MDGL - Free Report) Rezdiffra — which the FDA approved this March as the first-ever NASH drug. Madrigal commercially launched this drug in April.
Based on the VOYAGE study results, we believe that VK2809 could rival MDGL’s Rezdiffra. VKTX will have to speed up drug development as several other companies, including Akero Therapeutics, Lilly and Novo, are rapidly advancing their respective NASH drugs across mid-stage and late-stage studies.
VKTX Stock Valuation & Estimates
The company is trading at a premium to the industry. Going by the price/book ratio, the stock currently trades at 7.71, trailing 12-month book value, higher than 3.97 for the industry and the stock’s mean of 2.04.
Image Source: Zacks Investment Research
Estimates for Viking Therapeutics’ 2024 loss per share have narrowed from $1.11 to 99 cents in the past 60 days. Over the same timeframe, loss estimates for 2025 have widened from $1.45 to $1.48, probably due to an increase in the company’s R&D costs to support pipeline expansion.
Image Source: Zacks Investment Research
Conclusion
Viking has its fair share of problems which include the lack of a revenue stream and the presence of pharma giants like Lilly and Novo in its target market spaces. However, the company’s accumulated cash balance of around $942 million (as of June 2024-end) and zero debt ensures that it can sufficiently fund its day-to-day operations, including late-stage pipeline programs, without triggering bankruptcy for at least the next few years.
Though Viking is trading at a premium to the industry, we would recommend investors looking for growth stocks to add this #3 Ranked ticker to their portfolios. Considering the immense demand for obesity drugs, we believe that there is room for smaller biotechs like VKTX to grab a small piece of this growing market.
For those who already own the stock, multiple catalysts could trigger share price movements, like pipeline advancements, data from these studies and even potential drug approvals. These should keep such investors vested in the stock. Given the success obtained by Viking in pipeline development, it could also be eyed as an attractive acquisition target by big pharma.
Image: Bigstock
Viking Surges 342% in the Past Year: How Should You Play the Stock?
Shares of Viking Therapeutics (VKTX - Free Report) have more than tripled in market value in the past year. The upside was triggered by positive updates on its pipeline programs for obesity and non-alcoholic steatohepatitis (NASH) indications.
Based on the encouraging results, management intends to meet with the FDA to discuss the late-stage study design and timings for both programs.
In the past year, the stock has significantly outperformed the industry’s 2.5% decline. The stock has outperformed the sector and the S&P 500 during the same period. VKTX’s shares are also trading above the 50-day and 200-day moving averages.
VKTX Stock Outperforms Industry, Sector & S&P 500
Let’s take a brief look at the factors governing the company’s prospects.
Market Potential for VKTX’s Drug in the Obesity Space
The obesity market has garnered much interest lately, with two companies — Eli Lilly (LLY - Free Report) and Novo Nordisk (NVO - Free Report) — dominating this space with their respective obesity drugs Zepbound and Wegovy. Despite having approved drugs in this space, LLY and NVO have been unable to cope with existing demand.
Per research conducted by Goldman Sachs, the obesity market in the United States is expected to reach $130 billion by 2030. This is also evident from the fact that Lilly and Novo are investing heavily to optimize their production capacities and have started evaluating multiple other novel obesity candidates.
Viking is one of the few biotech stocks that has shown immense potential in this space. The company is developing VK2735 as a subcutaneous (SC) injection and as an oral pill in a mid-stage study and an early-stage study, respectively. The drug has shown blockbuster potential, having demonstrated superior weight-reduction capabilities in clinical studies.
In February, management reported that the phase II VENTURE study, which evaluated the SC formulation of VK2735, achieved its primary and all secondary endpoints with statistical significance. Patients treated with the SC formulation achieved a mean weight reduction of 14.7% after 13 weeks compared with 1.7% in the placebo group. In March, the company reported data from the early-stage study on the oral formulation of the drug, which demonstrated promising dose-dependent reductions in mean body weight after 28 days of daily dosing.
Before 2024-end, management plans to meet with the FDA to discuss the late-stage study design on the SC formulation of VK2735 and also start a mid-stage study on the oral formulation.
VKTX’s NASH Drug Shows Promise
Viking Therapeutics recently completed the VOYAGE study, which evaluated VK2809 as a potential treatment for patients with biopsy-confirmed NASH.
The study achieved its secondary endpoints of histologic changes assessed by hepatic biopsy after 52 weeks of treatment with VK2809 when compared with placebo. Overall, 40-50% of patients who received VK2809 achieved NASH resolution(meaning the disease symptoms disappeared) and at least a one-stage improvement in fibrosis. In contrast, only 20% of patients who received a placebo achieved similar results. The study previously achieved its primary endpoint — patients who received VK2809 achieved a statistically significant reduction in liver fat content following 12 weeks of treatment.
VKTX intends to meet with the FDA in fourth-quarter 2024 to discuss the VOYAGE study results before making decisions on the program.
Unlike the obesity space which has already demonstrated immense market potential, the NASH space is relatively very new. Currently, there is only one marketed drug in this space — Madrigal Pharmaceuticals’ (MDGL - Free Report) Rezdiffra — which the FDA approved this March as the first-ever NASH drug. Madrigal commercially launched this drug in April.
Based on the VOYAGE study results, we believe that VK2809 could rival MDGL’s Rezdiffra. VKTX will have to speed up drug development as several other companies, including Akero Therapeutics, Lilly and Novo, are rapidly advancing their respective NASH drugs across mid-stage and late-stage studies.
VKTX Stock Valuation & Estimates
The company is trading at a premium to the industry. Going by the price/book ratio, the stock currently trades at 7.71, trailing 12-month book value, higher than 3.97 for the industry and the stock’s mean of 2.04.
Estimates for Viking Therapeutics’ 2024 loss per share have narrowed from $1.11 to 99 cents in the past 60 days. Over the same timeframe, loss estimates for 2025 have widened from $1.45 to $1.48, probably due to an increase in the company’s R&D costs to support pipeline expansion.
Conclusion
Viking has its fair share of problems which include the lack of a revenue stream and the presence of pharma giants like Lilly and Novo in its target market spaces. However, the company’s accumulated cash balance of around $942 million (as of June 2024-end) and zero debt ensures that it can sufficiently fund its day-to-day operations, including late-stage pipeline programs, without triggering bankruptcy for at least the next few years.
Though Viking is trading at a premium to the industry, we would recommend investors looking for growth stocks to add this #3 Ranked ticker to their portfolios. Considering the immense demand for obesity drugs, we believe that there is room for smaller biotechs like VKTX to grab a small piece of this growing market.
For those who already own the stock, multiple catalysts could trigger share price movements, like pipeline advancements, data from these studies and even potential drug approvals. These should keep such investors vested in the stock. Given the success obtained by Viking in pipeline development, it could also be eyed as an attractive acquisition target by big pharma.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.