What happened

Shares of Viking Therapeutics (NASDAQ:VKTX) sank 9.8% lower as of 3:37 p.m. EST on Thursday after falling as much as 12.9% earlier in the day. The biotech didn't make any announcements to cause its share price to drop. Instead, Viking fell victim to a pullback in the overall market following Wednesday's big gain.

So what

In one way, it might make sense that Viking's share price would decline more significantly than the broader market indexes. After all, the company has no sustained revenue and is at least a few years away from even the possibility of launching a product. Simply put, Viking is riskier than most stocks.

Scientist with mask on holding a beaker.

Image source: Getty Images.

But when you look at the big picture, there's really no underlying reason why Viking should fall at all because other stocks drop. Viking's prospects hinge solely on its pipeline candidates. Tensions between the U.S. and China and what President Trump thinks about the Federal Reserve Board's decisions don't change a thing about Viking's chances of success with its pipeline.

And those chances still look pretty good. Viking reported great results in September from a phase 2 study of VK2809 in treating nonalcoholic fatty liver disease (NAFLD). The company followed up with positive results from another phase 2 study of VK5211 in helping patients recover from hip fracture.

Now what

While Viking's share price could continue to experience volatility due to swings in the broader market, the more important thing for investors to watch is the biotech's progress on two fronts. Viking is looking to find a partner for VK5211 after its successful phase 2 results. The company also plans to initiate a new study in early 2019 evaluating VK2809 in treating nonalcoholic steatohepatitis (NASH).

In addition, there's a potential wild card that could be huge for Viking Therapeutics. Several big drugmakers are developing experimental NASH therapies. Viking could be an attractive acquisition target for a major player seeking to bolster its NASH pipeline. This is only a possibility for now -- but it's an intriguing one.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.