Stocks of Viking Therapeutics (VKTX) have surged nearly 25% in the past month, fueled by progress in its obesity and NASH candidates set to enter late-stage development by 2025.
Just recently, VKTX revealed plans to advance obesity drug VK2735 into phase III development following positive feedback from the FDA. The company also intends to discuss the late-stage study design for NASH drug candidate VK2809. This momentum contributed to Viking’s outperformance compared to industry peers and broad market indices.
Viking’s Market Outperformance
Before diving deeper, let’s explore factors shaping Viking’s future growth trajectory.
Promising Developments in Obesity Drug Sector
The obesity market has garnered investor interest in recent years due to stellar sales of drugs like Zepbound and Wegovy. Despite lacking marketed drugs, VKTX stands as a frontrunner in this space, with VK2735 exhibiting significant weight reduction potential in clinical trials.
VK2735 has demonstrated impressive results in both subcutaneous and oral formulations. The drug showed a remarkable weight reduction of 14.7% in the subcutaneous trial group compared to just 1.7% in the placebo group. As management prepares for late-stage development of the subcutaneous formulation, a mid-stage study for the oral variant is set to commence soon.
Moreover, Goldman Sachs projects the US obesity market to reach $130 billion by 2030, indicating substantial growth potential. Lilly and Novo’s ongoing struggle to meet market demand despite successful drug sales underlines the vast opportunity in this sector.
Positive Outlook for NASH Drug
Following successful trials, VK2809 shows promise as a NASH treatment, with significant hepatic histologic improvements and NASH resolution rates. The drug’s potential may position it as a competitor to existing NASH treatments, such as Madrigal Pharmaceuticals’ Rezdiffra. Viking is actively seeking partnerships to advance and commercialize VK2809.
Competitive Landscape Challenges
While Viking’s pipeline shows strong clinical results, stiff competition abounds in the obesity and NASH markets. Established giants like Eli Lilly and Novo Nordisk, along with other industry heavyweights, pose significant challenges with their robust infrastructure and development capabilities.
Stock Performance and Projections
Viking’s stock trades at a premium compared to industry peers, reflecting investor optimism. However, loss estimates for 2025 have widened due to increased R&D spending. The company’s substantial cash reserves provide a cushion for future operations, including pipeline advancements.
Final Thoughts
Viking Therapeutics presents an exciting investment opportunity for growth-oriented investors. Bolstered by a robust pipeline and strong cash position, Viking stands poised for potential acquisition by larger pharmaceutical entities. Investors should monitor key catalysts like pipeline progress and study outcomes to gauge future stock movement.