2023-03-16 14:43:48 ET
Summary
- Biotech name Viking Therapeutics is going back into the spotlight for the first time in nearly a year in today's focus article.
- Thanks mainly to promising results from a competitor in the NASH space, the shares have soared more than 150% since December.
- Can the rally in Viking continue? An updated analysis follows in the paragraphs below.
"That is all any of us can do, delay death. But some are more cowardly about it than others ." - Linnea Hartsuyker, The Golden Wolf.
We are circling back on Viking Therapeutics, Inc. ( VKTX ) today, as there has been some recent news flow around this developmental concern recently, and we have not taken a new look at Viking since our last article on the company in early spring of last year. The stock price has also tripled since late last year. Are VKTX shares still a buy now, or is profit-taking likely ahead? An updated analysis follows below.
Company Overview:
Viking Therapeutics, Inc.'s pipeline continues to be focused on developing novel therapies for metabolic and endocrine disorders. This San Diego headquartered clinical-stage biopharmaceutical company's stock now trades just under $11.00 a share and sports an approximate market capitalization of $850 million. This is more than quadruple that when we concluded our last piece on Viking with: " VKTX deserves a small 'watch item' holding given its pipeline is not selling much above cash value at this time."
As can be seen above, the company has several compounds in early and mid-stage development.
The company lead compound is called VK2809. This is a novel and oral small molecule thyroid hormone receptor agonist that possesses selectivity for liver tissue. A Phase 2b readout from its "VOYAGE" trial evaluating for the treatment of NASH and fibrosis is expected out sometime in the coming quarter.
A Phase 2a study showed encouraging results against NASH, which is a huge and growing market.
Viking has a couple of other earlier-stage compounds in development, including VK2735 and VK0214. Initial Phase 1 results for weight loss/NASH candidate VK2735 are scheduled for an early 2024 readout while initial Phase 1 data for VK0214 in neurogenerative disease X-linked adrenoleukodystrophy should be out sometime in the second half of this year. That said, the near and medium-term future for Viking will be driven by the success or failure of VK2809.
Analyst Commentary & Balance Sheet:
Since fourth quarter results were posted in February, five analyst firms including Oppenheimer and Raymond James have reiterated Buy/Outperform ratings on the shares of Viking Therapeutics. Price targets proffered range from $12 to $21 a share.
Approximately seven percent of the outstanding float in the shares is currently held short. There has been no insider activity in Viking Therapeutics, Inc. stock since a director bought just over $110,000 worth of shares in early May of last year. The company ended the 2022 fiscal year with approximately $155 million worth of cash and marketable securities on its balance sheet. Management has stated that this " provides an operating runway that extends beyond the key milestones for our clinical programs ." The company had a net loss of $68.9 million for FY2022. Viking has no long-term debt.
Verdict:
There continue to be positives around Viking Therapeutics nearly one year since we last looked at the company. The company has some upcoming potential trial catalysts, solid analyst support, is well-funded, and insiders have not used the recent big move in the stock to cash in some of their chips.
That said, Viking Therapeutics, Inc. stock has more than quadrupled from where we last profiled this name on Seeking Alpha. In addition, most of the move in the shares was the result of study results from a competitor in the NASH space. Madrigal Pharmaceuticals, Inc. ( MDGL ) on December 19th disclosed a late-stage trial around their primary drug candidate, an THR ?-selective agonist, resmetirom, which saw impressive results in NASH and liver fibrosis.
VKTX has move up from $4.00 a share to nearly $11.00 a share, largely in sympathy since those Madrigal trial results were announced. Therefore, I have taken profits on most of my small stake in VKTX. Mainly because of the stock's run higher, and because we have seen the second and third-largest bank failures in U.S. history over the past week. This makes me very cautious on the overall market and anything in a high beta space like Viking.
I will retain a small stake in Viking and continue to monitor this story, however, as NASH is a huge disease area even if there are myriad biopharma concerns targeting this affliction. We will probably glance back in on Viking Therapeutics, Inc. once Voyage results have been posted.
"Life is a jig saw puzzle and we are the pieces. Together we make the whole picture ." - Robynn Gabel, Norse Hearts.
For further details see:
Viking Therapeutics: Some Caution Warranted