Viking Therapeutics, a company in the clinical-stage of drug development focusing on metabolic treatments, has seen its stock value triple this year. Analysts remain optimistic about its future, with a consensus target price suggesting a potential 76% increase from its current stock price. However, before diving into investments, it is crucial to understand the company’s experimental drugs in the pipeline.
Contents
The Bullish Outlook for Viking Therapeutics
Although Viking Therapeutics doesn’t have any approved drugs yet, its experimental drug VK2735, now in phase 3 trials, shows promise as a potential blockbuster. This weekly injection targets GLP-1 and GIP receptors in the pancreas to decrease appetite. Currently, Eli Lilly’s tirzepatide is the only treatment acting on these receptors, gaining significant market traction against Novo Nordisk’s semaglutide. Viking plans to initiate a phase 3 obesity trial with VK2735 after an FDA meeting later this year. While other dual GLP-1 and GIP agonists are under development, VK2735 appears to be ahead in the race for FDA approval.
Viking’s market cap stands at $7.2 billion, and if VK2735 captures even a small portion of the GLP-1/GIP drug market, its stock price could significantly increase. Besides the injectable VK2735, Viking is also preparing to start phase 2 trials for an oral version. Furthermore, Viking is developing VK2809 for metabolic dysfunction-associated steatohepatitis (MASH), a progressive liver condition. With the success of a long phase 2 trial, VK2809 might secure FDA review and approval, potentially leading to sales from two commercial-stage drugs by the end of 2025.
Cautionary Considerations
Despite the promising outlook, Viking Therapeutics’ $7.2 billion market cap is based on the rapid approval and successful launch of VK2735. The future sales potential for VK2809, although significant, pales in comparison to weight management treatments. Many independent drug launches fall short of expectations, and there’s no assurance that VK2735’s phase 3 trial results will satisfy the FDA.
With $942 million in cash as of June, Viking faces increased operating expenses for large phase 3 trials. If the company struggles to launch these drugs before depleting its cash reserves, investors may face substantial losses. Investors with low to moderate risk tolerance should approach with caution, but those with a higher risk appetite might consider adding Viking Therapeutics to a diversified portfolio.
Investment Considerations
Before investing in Viking Therapeutics, it’s wise to weigh other opportunities. The Motley Fool’s Stock Advisor team has identified what they believe are the top 10 stocks to buy now, and Viking Therapeutics didn’t make the list. Historically, stocks like Nvidia, recommended by Stock Advisor in 2005, have yielded impressive returns, showcasing the team’s ability to outperform the market. Don’t miss the chance to explore the latest top 10 list and potentially high-return investments.
Summary:
Viking Therapeutics’ stock has surged this year due to its promising drug candidates, particularly VK2735, which targets GLP-1 and GIP receptors. Despite the potential for significant stock gains, the company faces challenges, including the need for rapid FDA approval and increased expenses. Investors should weigh the risks and consider diverse opportunities before investing.
