Viking Therapeutics (NASDAQ:VKTX) witnessed a dramatic surge this week following the announcement of promising phase II clinical trial results for its experimental weight-loss drug, stirring excitement on Wall Street.
The company’s stock skyrocketed on Tuesday, more than doubling in value by over 120% to reach $85 per share as investors applauded the favorable outcomes.
However, the euphoria was tempered on Thursday as the California-based firm disclosed a $550 million stock offering, causing the stock to retreat by 15% to $80 per share during afternoon trading. The offering, consisting of 6.47 million shares priced at $85 each, aims to fuel the development of Viking’s weight-loss treatments, including a pill version.
Viking Therapeutics had already been performing strongly earlier this year, but the recent breakthrough significantly accelerated its upward trajectory, with shares soaring by 322% since the year’s commencement.
The focal point of this fervor is the injectable drug VK2735, which demonstrated remarkable efficacy in helping patients shed up to 15% of their body weight within a mere 13 weeks. Analysts suggest that these results position Viking as a prime acquisition target.
The data was particularly striking as Viking had initially anticipated weight loss within a range of 7% to 8%, aligning with current standards set by notable weight-loss drugs like Novo Nordisk’s Ozempic and Wegovy, and Eli Lilly’s Mounjaro and Zepbound.
Justin Zelin, an analyst at BTIG, emphasized the exceptional nature of Viking’s achievement, noting that VK2735 induced twice the weight loss compared to Eli Lilly’s medication within the same timeframe.
Zelin further speculated that patients could potentially achieve weight loss of up to 25% to 30% over a year on the drug.
Following the groundbreaking results, analysts at William Blair revised their peak sales estimates for Viking upward, projecting $14.4 billion in the US and $7.2 billion in Europe. They also raised the company’s fair value to $9.9 billion ($98.99 per share) from their previous valuation of $5.5 billion.
Predicting that the true value of VK2735 lies in the hands of a larger pharmaceutical company, the analysts anticipate heightened interest in Viking as a potential acquisition target.
Zelin echoed these sentiments, suggesting that Viking’s success has reignited speculation about a takeover, particularly among major players in the pharmaceutical industry with a keen interest in the high-revenue space occupied by GLP franchises.
He pointed out that companies like Pfizer, which previously discontinued an asset in the weight-loss sector, are closely monitoring developments in this lucrative market.
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