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Why Viking Therapeutics Stock Briefly Popped Today

By George Budwell - Jun 17, 2021 at 9:55AM

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An early-stage study gave investors reasons to cheer this morning.

What happened

Shares of the developmental-stage biotech Viking Therapeutics (VKTX -3.08%) jumped by as much as 11.2% in pre-market action Thursday morning. The company's shares perked up in response to an intriguing top-line readout for the experimental X-linked adrenoleukodystrophy (X-ALD) drug dubbed VK0214 in a phase 1 trial.

X-ALD is an inherited disease characterized by the gradual loss of a key structural protein (myelin) encasing the nerves in the brain and spinal cord. Previously, Viking was granted orphan drug designation by the Food and Drug Administration (FDA) for VK0214 as a treatment for this often fatal genetic disorder. 

A researcher inspecting a vial.

Image source: Getty Images.

So what

Turning to the details, Viking reported that this small phase 1 trial, consisting of healthy volunteers, yielded both favorable safety results (no adverse events), and some encouraging hints at efficacy. Most notably, patients treated with VK0214 in the study demonstrated reductions in low-density lipoprotein cholesterol (LDL-C), triglycerides, and apolipoprotein B across all dose levels. Viking thus plans to kick off a second phase 1 trial to evaluate the drug in X-ALD patients in the coming weeks.    

Now what

Is Viking's stock a strong buy in the wake of these early-stage trial results? The long and short of it is that the biotech's fate truly rests with its lead candidate VK2809; an experimental drug currently in mid-stage development for the high-value liver disease known as nonalcoholic steatohepatitis (NASH). VK0214, in short, is simply icing on the cake. So while these early trial results are definitely a step in the right direction, they don't necessary change the biotech's underlying investing thesis. 

George Budwell 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.

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