What happened

Shares of the clinical-stage biotech Viking Therapeutics (NASDAQ:VKTX) rose by as much as 15% in pre-market trading today. Why are investors bidding up this stock today?

The big news is that Viking presented updated data for its nonalcoholic steatohepatitis (NASH) drug candidate, VK2809, at the annual meeting of the American Association for the Study of Liver Diseases yesterday.

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Image source: Getty Images.

So what

While most of the results were largely a rehash of the company's prior top-line readout released last September, Viking did unveil a new "super-responder" analysis, where a whopping 67% of VK2809-treated patients exhibited ≥ 50% reduction in liver fat content at 12 weeks. The company reportedly assessed liver fat content by magnetic resonance imaging, proton density fat fraction. As an important aside, Viking also reiterated that no serious adverse events were observed among patients receiving either VK2809 or placebo in the study.

Given VK2809's outstanding safety and efficacy profile to date, Viking appears to have a real shot at grabbing a best-in-class designation for this drug. At present, Viking trails both Intercept Pharmaceuticals (NASDAQ:ICPT) and Madrigal Pharmaceuticals (NASDAQ:MDGL) in the race to bring the first drug ever to market for NASH. But that might not matter if the company can develop a treatment that is both safer and considerably more potent than either of these front runners. 

Now what

Why is this latest data readout such a big deal? In short, Viking is attempting to capture a significant portion of this multibillion-dollar drug market with VK2809 -- not just develop a so-called "me-too" drug that's unable to compete on even keel with Intercept's and Madrigal's offerings. This new super-responder analysis seems to suggest that VK2809 may indeed have what it takes to overcome Intercept's and Madrigal's first-mover advantage. If so, Viking's shares will turn out to be a downright bargain at these levels.

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