Viking Therapeutics Is Having a Year to Remember: Time to Buy?

September 19, 2024 at 07:45 AM EDT

Two apples, measuring tape, pills and notebook - stock image

Viking Therapeutics Inc. (NASDAQ: VKTX), a clinical-stage biotechnology company with a market cap approaching $7 billion, is turning heads in 2024. Year to date, the stock has surged an impressive 238%, and its rise over the past 12 months has been even more dramatic, with shares climbing 326%.

For a mid-cap biotech, these kinds of gains significantly outpace both the broader market and its sector.

So, what’s driving Viking’s outperformance, and should investors on Main Street be paying attention?

What Is Viking Therapeutics?

Founded in 2012 and headquartered in San Diego, California, Viking Therapeutics is focused on developing novel therapies for metabolic and endocrine disorders. Their pipeline includes treatments targeting non-alcoholic steatohepatitis (NASH), hip fracture recovery, and type 2 diabetes. Viking's mission is to deliver life-changing treatments for patients with unmet medical needs, and its recent clinical success has captured the attention of Wall Street.

Why Has Wall Street Been Bullish on VKTX?

The stock’s notable surge started in February when Viking announced promising clinical trial results for VK2735, a dual GLP-1 and GIP receptor agonist being developed as a treatment for weight management. In its Phase 1 trial, patients who received VK2735 lost an average of 14.7% of their body weight after just 13 weeks of treatment, with weight loss continuing as the trial progressed. Viking is also working on an oral tablet version of the drug, currently in Phase 3 development.

The market for weight loss treatments has exploded in recent years, mainly due to the success of semaglutide, marketed by Novo Nordisk under the names Ozempic and Wegovy. Semaglutide is a GLP-1 drug, and its annualized sales reached nearly $28 billion in the second quarter of 2024. Viking's VK2735, which works on pathways similar to semaglutide, has drawn significant interest from investors and analysts who see it as a potential competitor in the growing weight-loss market.

Viking Therapeutics: More Than Just Weight Loss

While weight management has been a primary focus for Viking, it’s not the only promising aspect of the company’s pipeline. Viking's most advanced candidate, VK2809, has shown exceptional potential in treating MASH (Metabolic Dysfunction-Associated Steatohepatitis), previously known as NASH.

MASH affects millions of Americans by causing fat buildup in the liver, leading to inflammation and fibrosis. Viking recently reported that after 52 weeks of treatment, up to 75% of patients treated with VK2809 experienced resolution of MASH without worsening fibrosis, compared to just 29% in the placebo group. These results have positioned VK2809 as a strong candidate for addressing a condition lacking effective treatment options.

Analyst Love for VKTX

Viking’s recent success has not gone unnoticed by Wall Street analysts.

The stock currently boasts a Buy rating based on 11 analyst recommendations, with a consensus price target of $108.60, implying a further 72.5% upside from current levels.

Morgan Stanley recently reiterated its Overweight rating on VKTX, setting a price target of $105, reflecting a nearly 73% upside.

JPMorgan also initiated coverage in early September with an Overweight rating and a $80 price target, implying a 46% upside.

Should Risk-Tolerant Investors Consider Viking’s Weight-Loss Pipeline?

The biotech sector is known for its volatility. Still, Viking’s significant pipeline progress and its potential entry into the lucrative weight-loss drug market make it an intriguing candidate for investors with a higher risk tolerance. While the stock has already experienced triple-digit gains in 2024, analysts still forecast substantial upside.

Viking Therapeutics offers a compelling opportunity for those looking to gain exposure to an innovative biotech with significant momentum. With its VK2735 and VK2809 programs showing clinically solid results and Wall Street’s continued bullishness, VKTX could continue to deliver substantial returns to shareholders.

However, as with any investment in clinical-stage biotech, it’s important to remember the risks, including regulatory hurdles and competition. But for now, Viking Therapeutics remains a biotech success story that investors may want to keep on their radar.

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