Shares in Viking Therapeutics (VKTX +2.81%) declined by 18.6% in July, according to data from S&P Global Market Intelligence. The decline came during a slow month for newsflow in its pipeline, as investors began to fret about the company's financial position.
Viking Therapeutics' quiet month
The healthcare company delivered its second-quarter earnings report at the end of the month and confirmed that its phase 3 trials for its weight loss drug VK2735 in subcutaneous (injection) form were fully enrolled and proceeding in line with management's plans, and also that it continued to expect its phase 3 trials for VK2735 (oral) to begin in the fourth quarter. Finally, on VK2736, management confirmed that the phase 1 maintenance trial will report results this quarter.
NASDAQ: VKTX
Key Data Points
As a reminder, VK2735 is being developed as a dual-formulation therapy, in which an initial injectable dose can be followed by an oral maintenance dose. It's an exciting possibility because VK2735 has demonstrated the ability to produce a steeper velocity of weight loss than its peers in previous trials.
Why Viking Therapeutics' stock declined in July
While all the above is good news, it's not really significant new news, and didn't serve as a catalyst to send the stock higher. Instead, the market focused on the cash needed to fund these trials. Viking's cash usage was about $96 million in the quarter, and it ended the quarter with $502 million in cash and equivalents, down from $706 million at the end of 2025.
Moreover, the company filed a registration statement with the Securities and Exchange Commission (SEC) outlining that it had entered into an agreement to offer and sell up to $500 million of its common stock. In addition, it may offer preferred stock, debt securities, warrants, and other instruments to raise cash .
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What it means to investors
The cash burn and SEC filing are a reminder to investors that lengthy phase 3 trials don't come free, and not only is there a risk that VK2735 trial data may disappoint, but also that commercial prospects may be blunted by competitors' success in trials. There's also a risk that existing shareholders' claims to future earnings and cash flow will be diluted by future equity raises.
That said, management did say it had "cash into 2028" on the earnings call, and the phase 3 trial for VK2735 subcutaneous should report results by then. As such, Viking Therapeutics doesn't necessarily need to raise cash before major catalysts occur, but given the SEC filing, it's safer to assume it will. Still, that shouldn't detract from the company's potential to become a significant player in the weight-loss drug market.
