Viking Therapeutics (NASDAQ:VKTX) has been making significant waves in the biotech sector, with its stock surging 283% year-to-date and an astounding 520% over the last 12 months. Despite its remarkable performance, the mid-cap pharmaceutical company is still trading 28% below its February all-time highs, following a notable 19% decline in a recent trading session.
Viking Therapeutics specializes in developing therapies for metabolic and endocrine disorders, focusing on the rapidly growing anti-obesity medicines market. A research report from Morgan Stanley forecasts this market to balloon from $2.4 billion in 2022 to a staggering $77 billion by 2030, positioning companies like Viking Therapeutics for substantial growth opportunities.
VK2735, Viking’s weight-loss drug, has shown promising results in phase 2 clinical trials, with patients experiencing a 14.7% reduction in body mass over 13 weeks compared to just 1.7% in the placebo group. This success has led to optimism regarding the drug’s potential approval, especially pending positive results from phase 3 trials.
Truist Securities recently raised its price target for Viking Therapeutics to a Street-high of $120 following the encouraging phase 2 trial data. However, the company faces stiff competition from industry giants like Eli Lilly and Novo Nordisk, particularly with Novo Nordisk’s promising clinical-stage weight-loss drug.
Novo Nordisk’s next-generation drug boasts an oral formulation, making it more convenient for manufacturing and patient administration than Viking’s subcutaneous treatment. This development has raised concerns and contributed to a recent decline in Viking Therapeutics’ stock price.
Assessing VKTX’s valuation is challenging given its pre-revenue status. However, VKTX is projected to increase its losses in the coming years, reaching around $220 million by 2025. Despite this, Viking Therapeutics ended 2023 with over $360 million in cash, providing a buffer to sustain its cash burn rates for the next few years.
Analysts remain bullish on VKTX, with eight out of nine analysts recommending a “strong buy” and one recommending a “moderate buy.” The average target price for Viking Therapeutics is $97.75, indicating a potential upside of approximately 39% from current levels.
While Viking Therapeutics has shown impressive growth potential, investors should carefully consider the competitive landscape and the uncertainties associated with investing in pre-revenue biotech companies before making investment decisions.
Featured Image: Freepik
Author Faith Yakubu 
