Positive Progress in Weight-Loss Drug Trials

Viking Therapeutics Inc., a San Diego-based pharmaceutical company, experienced a remarkable 17% surge in its stock price to achieve a record high. The company announced that it expects to release data from early and mid-stage trials of its weight-loss drug sooner than anticipated, moving the timeline up from the first half of the year.

This promising news has been well-received by analysts who believe that positive data in the coming months could drive the stock to even greater heights.

Viking is currently developing a GLP-1 receptor agonist as a potential treatment for obesity and diabetes. This new class of drugs has gained considerable popularity and has been instrumental in driving the stocks of industry leaders such as Eli Lilly & Co. and Novo Nordisk.

While Viking's stock currently trades at just $28 per share, a significant contrast to Eli Lilly's $739 and Novo Nordisk's $118 for their American depositary receipt, analysts believe that positive outcomes from the trials could positively impact Viking's valuation and increase its appeal to strategic buyers.

Viking's injectable drug VKTX2735 and oral treatment VK2735 function similarly to Novo Nordisk's Wegovy and Ozempic, as well as Lilly's Mounjaro. These medications emulate the effects of GLP-1, a gut hormone known for its ability to regulate blood sugar levels and suppress appetite.

In their quarterly earnings report, Viking made this announcement alongside their financial results.

Maxim Group analysts have reiterated their buy rating on Viking's stock and raised the price target to $50 from $35—the new target representing a substantial 79% increase from the current price.

Equally optimistic, Truist analysts have reissued their buy rating on Viking's stock and maintained a $32 price target. They continue to view Viking as one of their top five favorite stocks for 2024.

During the earnings call, Viking's management stated that an approximately 8% placebo-adjusted weight loss would be deemed favorable for advancing to a Phase 3 trial.

Overall, Viking Therapeutics Inc. shows promising potential in its weight-loss drug development, and investors eagerly await the forthcoming trial results.

Promising Results for Tirzepatide in Weight Loss Treatment

Recently, analysts led by Joon Lee highlighted the potential of tirzepatide, also known as Mounjaro, in achieving significant weight loss. With a placebo-adjusted weight loss of approximately 6.5% at week 12, tirzepatide has displayed promising results.

The optimism regarding tirzepatide is further bolstered by the positive outcomes of the clinical trial for subcutaneous VK2735, which exhibited a 6% placebo-adjusted weight loss at Week 4. Analysts believe that with a 50% higher dosage administered in the Phase 2 trial called Venture, VK2735 has a high probability of surpassing the 8% weight loss target.

Apart from its potential in weight loss treatment, Viking, the pharmaceutical company behind these developments, is also focusing on addressing nonalcoholic steatohepatitis (NASH), a severe form of nonalcoholic fatty liver disease (NAFLD). NAFLD encompasses a range of conditions caused by the accumulation of excess fat in liver cells.

NASH is a leading cause of liver transplants, and there is significant anticipation surrounding the therapies currently under development. Recent data from Eli Lilly on the efficacy of Mounjaro in treating NASH has helped de-risk the GLP-1 drug class and increased the appeal of Viking's assets to potential acquirers interested in metabolic disease treatments.

Given these positive developments and future catalysts, Maxim analysts believe that Viking's shares (VKTX) have further upside potential considering the comprehensive data and market opportunities.

Year-to-date, Viking's stock has already gained an impressive 57%, outperforming the S&P 500 SPX, which has grown by 4.7%.