Viking Therapeutics Inc.’s stock rose another 8% Wednesday to extend its week-to-date gains to 145%, as analysts weighed in on its positive weight-loss drug news with some bullish commentary and said the company has become an attractive takeover target.
The news from Tuesday that a Phase 2 trial called Venture had produced positive data for its VK2735 weight-loss drug sent the stock
VKTX,
up 121% to a record level and record one-day gain. The stock is viewed as a cheaper entry for investors who want to play the mania around the new class of drugs.
“Venture doesn’t just unlock the value door, it kicks it in,” wrote Raymond James analysts, who raised their stock price target to $115 from $37 on the news. They also reiterated their buy rating on the stock. All 10 analysts polled by FactSet have a buy or equivalent rating on the stock of Viking, which is still a clinical-stage company with no product approved.
Analysts led by Steven Seedhouse had said they would defend their view that VK2735 is better than tirzepatide, which is the medical name for Eli Lilly & Co. Inc.’s Mounjaro, if the trial showed absolute weight loss of more than 11% in the 15 mg arm of the trial. The data showed a placebo-adjusted weight-loss of 13.1% for that arm.
“We’re here now to do just that,” they wrote in a note to clients.
Also read: Eli Lilly launches home delivery of obesity drug Zepbound — but warns against its use for cosmetic weight loss.
Maxim analysts raised their price target to $120 from $50 previously on the news. Analysts Naz Rahman and Jason McCarthy said longer studies of VK2375 could see more than 20% weight loss, given the potency demonstrated in the Venture trial.
“The GLP-1/GIP space is ultimately a large/mega cap pharma space, in our view,’ they wrote. “Viking has to partner for commercialization or likely late stage development. Considering the competitive nature of the product and the blockbuster growing market, we believe this further increases Viking’s attractiveness as a potential acquisition target with Viking’s NASH program being upside.”
Viking is also developing a treatment for NASH, or nonalcoholic steatohepatitis. NASH is a more severe version of nonalcoholic fatty liver disease, or NAFLD, a range of conditions that occurs when excess fat builds up in liver cells.
VK2735 is Viking’s GLP-1 receptor agonist that it’s developing in both injectable and oral form as a treatment for obesity and diabetes. The GLP-1 drugs have become highly popular and boosted profits and stock prices for the two leaders in the category, Eli Lilly
LLY,
and Denmark’s Novo Nordisk.
NVO,
NOVO.B,
Viking’s injectable and oral treatments use the same mechanism as Novo Nordisk’s Wegovy and Ozempic and Lilly’s Mounjaro, mimicking the effects of GLP-1, a gut hormone that can help control blood-sugar levels and reduce appetite. GLP stands for glucagon-like peptide.
The Venture trial met all primary and secondary endpoints, showing statistically significant reductions in body weight at all doses compared with placebo, the company said.
Patients receiving weekly doses of the drug subcutaneously lost up to 14.7% of their body weight from baseline after 13 weeks. The treatment was safe and well-tolerated with 95% of adverse events that were mostly gastrointestinal deemed mild or moderate. Most adverse events occurred early in the trial and patients recovered quickly.
“Up to 88% of patients in VK2735 treatment groups achieved >=10% weight loss, compared with 4% for placebo,” Viking said in a statement.
Viking is planning to meet with the Food and Drug Administration to discuss next steps.
Raymond James noted the company is also still planning to deliver data from a Phase 1 trial of the oral version of VK2735 this quarter, “and is likely to test a monthly subQ dosing regimen in a Phase 2b study, and just proved in our view the molecule is unique in a crowded field,” the analysts wrote.
“Tirzepatide’s commercial launch has been astounding,” said the note. “All in, this is a rare situation, and we think there remains substantial value to unlock for VK2735. We are increasing probability-of-success to 80% and increasing risk-adjusted penetration assumptions in obesity, now modeling peak sales of ~$10B.”
Oppenheimer analysts agreed and raised their stock price target to $116 from $46.
“Given the promising results, we believe VKTX has multiple options to explore additional dosing regimens and further optimize the safety/efficacy profile and improve patient experience,” analysts led by Jay Olson wrote in a note to clients.
One key area to explore is a once-monthly dosing based on the treatments unique PK profile, said the note, referring to Pharmacokinetics, which measures how the body interacts with administered substances for the entire duration of exposure.
Viking said a Phase 2b study is likely its next step and that could allow for a once-monthly dosing arm, said the note.
Viking’s stock is now up 392% in the year to date, while the S&P 500
SPX
has gained 6%.
Read the full article here
