Shouldone consider purchasing Viking Therapeutics during its price drop?
Viking Therapeutics (VKTX dropping by 1.75%) grabbed the spotlight this year as a prospective contender in one of the fastest-growing healthcare industries: weight loss medication. The biotech organization delivered solid evidence for a contender that could potentially challenge blockbuster weight loss medications from pharmaceutical titans Eli Lilly and Novo Nordisk. In a single trading day, the shares skyrocketed, rising more than 100%.
Since then, Viking has continued to endorse the promising data from its injectable candidate's trials and introduced favorable data from an earlier-stage oral form of the investigational drug. The stock is now on track for a staggering annual gain of over 260%, yet it's still down around 28% from its peak in February. Is this a chance to profit, and should you purchase Viking on a downturn? Let's examine.
Market leaders Eli Lilly and Novo Nordisk
Let's first discuss the specific market context. In the past few years, Novo Nordisk and Eli Lilly have brought drugs to market that target hormones involved in digestion, aiding in the regulation of blood sugar and appetite levels. Novo Nordisk's drugs are primarily based on the GLP-1 pathway, while Eli Lilly's treatments stimulate both GLP-1 and GIP, known as dual GLP-1/GIP receptor agonists. Viking's candidates share that dual GLP-1/GIP category.
The positive outcomes of these commercialized treatments, both in early-stage clinical trials and the real world, have been nothing short of impressive. Patients have flocked to doctors in search of prescriptions, leading to demand exceeding supply. As a result, Novo Nordisk and Eli Lilly have still managed to earn billions in revenue from these drugs, brands you've likely encountered in news headlines or social media mentions: Ozempic, Wegovy (from Novo Nordisk), and Mounjaro, Zepbound (from Eli Lilly).
Viking, with a market value of $7 billion, aims to eventually rival these industry giants. Novo Nordisk and Eli Lilly are valued at over $400 billion and $700 billion, respectively. Their size and early-market advantages provide them with a distinct edge, but it doesn't mean this emerging player can't secure a piece of the market, especially considering the strength of its data.
Viking's recent trial data
In Viking's most recent report, its oral candidate at the highest dose level achieved an average weight loss of up to 8.2% from the baseline over 28 days in a phase 1 trial. The weight loss amount and the treatment's tolerability at 100-milligram doses are both impressive. Additionally, the pill formulation of this candidate makes it easier to take than the injectable weight loss medications currently dominating the market.
It's essential to acknowledge that Viking isn't the sole company with ambitions to create weight loss drugs, as demonstrated at the recent ObesityWeek 2024, an annual gathering celebrating progress in the weight loss sector. For instance, during this event, AstraZeneca shared promising early data for its oral GLP-1 candidate, AZD5004, and informed Fierce Biotech that the company was committed to "competing to win" in the obesity drug market.
It's also worth noting that today's market giants are not only standing still but also advancing other candidates through their pipelines. For instance, Eli Lilly is conducting phase 3 trials for two weight loss candidates, one of which is an oral candidate.
Should you invest in Viking Therapeutics?
Does Viking have a chance in this market, and is purchasing the stock on a downturn a wise move? As mentioned, demand is high for weight loss medications, and the market could expand by 16 times to reach $100 billion by the end of the decade, according to Goldman Sachs Research.
This stat suggests there is room for more than just two companies to succeed. Some drugs may enter the market with features that make them better suited for specific patient types. Consequently, the opportunity exists for Viking and others to carve out a market share as long as efficacy and safety data remain strong.
A small player like Viking may also achieve success through partnering with or being acquired by another company. These potential scenarios could prove beneficial to investors. In summary, Viking represents an intriguing buy on a downturn for growth investors who can tolerate some risk.
Given the competitive landscape, venture capitalists and investors interested in the weight loss medication market might consider further exploring the potential investment opportunities with Viking Therapeutics. With its promising trial data and a market that Goldman Sachs predicts could expand by 16 times, reaching $100 billion by the end of the decade, Viking could potentially secure a significant market share or be an attractive acquisition target for established finance giants.
