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Viking Stock Rises 29% in Three Months: Time to Buy, Hold or Sell?
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Shares of Viking Therapeutics (VKTX - Free Report) have risen 29% in the past three months, significantly outperforming the industry’s 2.5% growth. 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
This uptick in stock price was triggered by positive updates from Viking’s pipeline programs.
Last week, VKTX reported positive results from a phase Ib study evaluating VK0214 in patients with adrenomyeloneuropathy, a form of a rare neurogenerative disease called X-linked adrenoleukodystrophy (X-ALD). The study met its primary endpoint — a once-daily dose of VK0214 over 28 days was safe and well-tolerated in study participants. Treatment with the drug also significantly reduced plasma levels of very long-chain fatty acids and other lipids compared to placebo.
While we acknowledge that VK0214 has a long way to go before it can achieve regulatory approval, the presence of a third promising treatment in VKTX’s pipeline provides investors with a company that offers a more diverse growth strategy. Management has currently been engaged in discussions with the FDA to advance its obesity andnon-alcoholic steatohepatitis (NASH) programs to late-stage development.
Let’s delve into the company’s strengths and weaknesses to gain a better understanding of how to play the stock amid the recent price increase.
Robust Market Potential 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. The demand for obesity drugs is rising in leaps and bounds, creating opportunity for new entrants.
Viking is one of the few biotech stocks with immense potential in this space. The company is developing VK2735 as a subcutaneous (SC) injection and an oral pill in mid-stage and early-stage studies, respectively.
VK2735 has shown blockbuster potential, demonstrating superior weight reduction capabilities in both clinical studies. In February 2024, 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 once-weekly SC formulation achieved a mean weight reduction of 14.7% after 13 weeks compared with 1.7% in the placebo group. In March 2024, Viking 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 the FDA to discuss the late-stage study design for the SC formulation of VK2735 and start a mid-stage study on the oral formulation. Management also plans to evaluate once-monthly dosing of VK2735 SC in a future clinical study.
Per a 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.
VKTX’s Encouraging Progress With NASH Drug
Earlier this year, Viking completed the phase IIb VOYAGE study on VK2809 in 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 compared to 20% in the placebo group.
The VOYAGE study previously achieved its primary endpoint — patients who received VK2809 achieved a statistically significant reduction in liver fat content following 12 weeks of treatment. Based on these results, we believe that the drug could rival Madrigal Pharmaceuticals’ (MDGL - Free Report) Rezdiffra, which was approved by the FDA earlier this year (in March) as the first-ever drug to treat NASH. Madrigal commercially launched this drug in April.
Viking intends to meet the FDA in the fourth quarter of 2024 to discuss the VOYAGE study results before making any further decision on the program.
Lack of Marketed Products: A Woe for VKTX Stock
While we acknowledge the fact that VKTX has three promising treatments in its pipeline, the company lacks a source of regular income generation. With no marketed drug in its portfolio, Viking has to shoulder significant cash burn due to ongoing clinical studies. Any developmental or regulatory setback to any of the ongoing studies may hurt the stock significantly. Its pipeline candidates are still undergoing clinical development and are at least a few years away from potential commercialization.
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 7.77, trailing 12-month book value, higher than 4.01 for the industry.
Image Source: Zacks Investment Research
Estimates for Viking Therapeutics’ 2024 loss per share have risen slightly from 99 cents to $1.00 in the past 60 days. Over the same timeframe, loss per share estimates for 2025 have narrowed from $1.48 to $1.46.
Image Source: Zacks Investment Research
How to Play VKTX Stock?
Viking has immensely boosted shareholder value in the past five years, with the stock skyrocketing nearly 900% during this timeframe despite the lack of a stable revenue stream. While we acknowledge that VKTX targets market spaces with the presence of pharma giants like Lilly and Novo, the company’s encouraging progress with its obesity and NASH drugs demonstrates robust potential for growth. Considering the immense demand for obesity drugs, we believe that there is room for smaller biotechs like VKTX to grab a share of this booming market.
Though Viking does trade at a premium when compared to the industry, we would recommend investors looking for growth stocks to add this Zacks Rank #3 (Hold) company to their portfolio. The company’s recently released results on the X-ALD drug show that management has a diverse growth strategy in place.
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. With an accumulated cash balance of around $942 million (as of June 2024-end) and zero debt, management can comfortably fund its day-to-day operations, including late-stage pipeline programs, without triggering bankruptcy for at least the next few years. Given the success obtained by Viking in pipeline development, it could also be eyed as an attractive acquisition target by big pharmaceutical companies.
Image: Bigstock
Viking Stock Rises 29% in Three Months: Time to Buy, Hold or Sell?
Shares of Viking Therapeutics (VKTX - Free Report) have risen 29% in the past three months, significantly outperforming the industry’s 2.5% growth. 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
This uptick in stock price was triggered by positive updates from Viking’s pipeline programs.
Last week, VKTX reported positive results from a phase Ib study evaluating VK0214 in patients with adrenomyeloneuropathy, a form of a rare neurogenerative disease called X-linked adrenoleukodystrophy (X-ALD). The study met its primary endpoint — a once-daily dose of VK0214 over 28 days was safe and well-tolerated in study participants. Treatment with the drug also significantly reduced plasma levels of very long-chain fatty acids and other lipids compared to placebo.
While we acknowledge that VK0214 has a long way to go before it can achieve regulatory approval, the presence of a third promising treatment in VKTX’s pipeline provides investors with a company that offers a more diverse growth strategy. Management has currently been engaged in discussions with the FDA to advance its obesity andnon-alcoholic steatohepatitis (NASH) programs to late-stage development.
Let’s delve into the company’s strengths and weaknesses to gain a better understanding of how to play the stock amid the recent price increase.
Robust Market Potential 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. The demand for obesity drugs is rising in leaps and bounds, creating opportunity for new entrants.
Viking is one of the few biotech stocks with immense potential in this space. The company is developing VK2735 as a subcutaneous (SC) injection and an oral pill in mid-stage and early-stage studies, respectively.
VK2735 has shown blockbuster potential, demonstrating superior weight reduction capabilities in both clinical studies. In February 2024, 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 once-weekly SC formulation achieved a mean weight reduction of 14.7% after 13 weeks compared with 1.7% in the placebo group. In March 2024, Viking 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 the FDA to discuss the late-stage study design for the SC formulation of VK2735 and start a mid-stage study on the oral formulation. Management also plans to evaluate once-monthly dosing of VK2735 SC in a future clinical study.
Per a 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.
VKTX’s Encouraging Progress With NASH Drug
Earlier this year, Viking completed the phase IIb VOYAGE study on VK2809 in 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 compared to 20% in the placebo group.
The VOYAGE study previously achieved its primary endpoint — patients who received VK2809 achieved a statistically significant reduction in liver fat content following 12 weeks of treatment. Based on these results, we believe that the drug could rival Madrigal Pharmaceuticals’ (MDGL - Free Report) Rezdiffra, which was approved by the FDA earlier this year (in March) as the first-ever drug to treat NASH. Madrigal commercially launched this drug in April.
Viking intends to meet the FDA in the fourth quarter of 2024 to discuss the VOYAGE study results before making any further decision on the program.
Lack of Marketed Products: A Woe for VKTX Stock
While we acknowledge the fact that VKTX has three promising treatments in its pipeline, the company lacks a source of regular income generation. With no marketed drug in its portfolio, Viking has to shoulder significant cash burn due to ongoing clinical studies. Any developmental or regulatory setback to any of the ongoing studies may hurt the stock significantly. Its pipeline candidates are still undergoing clinical development and are at least a few years away from potential commercialization.
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 7.77, trailing 12-month book value, higher than 4.01 for the industry.
Estimates for Viking Therapeutics’ 2024 loss per share have risen slightly from 99 cents to $1.00 in the past 60 days. Over the same timeframe, loss per share estimates for 2025 have narrowed from $1.48 to $1.46.
How to Play VKTX Stock?
Viking has immensely boosted shareholder value in the past five years, with the stock skyrocketing nearly 900% during this timeframe despite the lack of a stable revenue stream. While we acknowledge that VKTX targets market spaces with the presence of pharma giants like Lilly and Novo, the company’s encouraging progress with its obesity and NASH drugs demonstrates robust potential for growth. Considering the immense demand for obesity drugs, we believe that there is room for smaller biotechs like VKTX to grab a share of this booming market.
Though Viking does trade at a premium when compared to the industry, we would recommend investors looking for growth stocks to add this Zacks Rank #3 (Hold) company to their portfolio. The company’s recently released results on the X-ALD drug show that management has a diverse growth strategy in place.
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. With an accumulated cash balance of around $942 million (as of June 2024-end) and zero debt, management can comfortably fund its day-to-day operations, including late-stage pipeline programs, without triggering bankruptcy for at least the next few years. Given the success obtained by Viking in pipeline development, it could also be eyed as an attractive acquisition target by big pharmaceutical companies.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.