Shares of Viking Therapeutics (VKTX -0.29%) have climbed by 27% over the past month. The drugmaker is a serious candidate to make waves in the large and growing anti-obesity drug market. With several ongoing clinical trials, there could be important catalysts on the horizon. Viking's shares are currently trading at about $40 apiece. Could the stock soar over the next 18 months and reach $100?
Image source: The Motley Fool.
The bull case for Viking Therapeutics
Viking Therapeutics' leading weight-loss candidate, VK2735, mimics the actions of two gut hormones, GLP-1 and GIP. The former helps control satiety, while the latter helps regulate blood glucose. Medicines that activate both pathways could deliver better weight loss than those that only mimic the GLP-1 hormone, as we have seen with Zepbound, a dual GLP-1 and GIP agonist that is currently the best-selling weight management drug. Viking Therapeutics' VK2735 is undergoing a pair of phase 3 studies in overweight or obese patients.
One of them has also enrolled those with diabetes. We could see results from these studies within 12 to 18 months. That's likely the biggest catalyst on the horizon for Viking Therapeutics. However, the company is working on other candidates, including an oral formulation of VK2735, which should also start phase 3 studies by year-end (the one currently in late-stage trials is administered via subcutaneous injection). What if Viking Therapeutics posts strong clinical trial results for subcutaneous VK2735, perhaps showing that it could rival -- or even exceed -- Zepbound's efficacy?
In that case, Viking Therapeutics' share price will soar. In the meantime, the company may also benefit if other drugmakers report disappointing clinical trial data for their weight-loss candidates. And elsewhere, Viking Therapeutics is running a study to test whether various doses and formulations of VK2735, given daily or weekly, can help patients keep the weight off.
NASDAQ: VKTX
Key Data Points
This is an important initiative for the company, since many who take anti-obesity medicines end up regaining much of the weight they lost. Positive results from this maintenance trial could also jolt the stock price. Finally, Viking Therapeutics recently launched a phase 1 study for a brand-new weight-loss medicine that mimics the actions of the amylin and calcitonin hormones, which help regulate blood sugar, appetite, and calcium levels.
Targeting different pathways could address some shortcomings of current weight loss options, including undesirable side effects. Viking Therapeutics has a multipronged strategy that could eventually position it as a leader in the weight loss market.
Reasons to be skeptical
Viking Therapeutics is a clinical-stage biotech with no marketed products. That makes the stock inherently risky. Further, upcoming catalysts, especially phase 3 results for VK2735, will be binary events, where positive results will send the stock price soaring, while poor data will sink it. Also, progress in the industry over the next year will be important -- and more late-stage clinical trial weight loss successes will make it even harder for Viking Therapeutics to impress the market. What should investors do? My view is that Viking Therapeutics' VK2735 posted robust phase 2 results, and there is a reasonable chance it will impress investors with its late-stage studies. And if it does, reaching $100 by the end of 2027 is by no means unachievable. However, the stock is also on the risky side, and risk-averse investors should probably stay away.
