What happened
Shares of the clinical-stage metabolic disorder specialist Viking Therapeutics (VKTX -2.71%) were down by 6.45% on moderate volume as of 1:42 p.m. ET Thursday afternoon. The drugmaker's shares are sinking in lockstep with a wide swath of the developmental-stage biopharma space today.
Underscoring this point, the bellwhether SPDR S&P Biotech ETF was down by 2.36% on light volume at the time of this writing. Small- and mid-cap biotech stocks are under pressure today following the Federal Trade Commission's (FTC) decision to sue over the proposed merger between Amgen and Horizon Therapeutics earlier this week.
So what
Viking, for its part, appears to be taking this news particularly poorly due to the company's rumored candidacy as a possible takeover target. In short, investors seem concerned that this adverse legal action by the FTC may slow down the recent wave of business development activity in biopharma.
Before investors get too concerned, however, it's important to understand what's actually driving this takeover speculation. Viking has repeatedly floated to the top of the buyout rumor mill due to its early-stage weight loss candidate VK2735, as well as its mid-stage nonalcoholic steaptohepatitis (NASH) candidate, VK2809. Both drugs are targeting markets worth tens of billions in annual sales. Moreover, Viking's weight loss and NASH candidates have exhibited stellar clinical profiles to date.
Now what
Is this dip a buying opportunity? This marketwide swoon in response to the FTC's lawsuit over Amgen's buyout of Horizon appears to be wildly overdone. After all, this legal action probably won't influence big pharma's thinking on earlier-stage pipeline assets like VK2735 or VK2809. Hence, this pullback does come across as a good time to buy shares in this clinical-stage drugmaker.
