Amid heightened market volatility and rising economic uncertainty, investors are gradually moving away from speculative, pre-revenue stocks. However, is this rotation creating attractive buying opportunities? Viking Therapeutics (VKTX), a biotech company, may be worth watching.
So far this year, Viking Therapeutics’ stock price has underperformed, falling 15% year-to-date. Despite this, Wall Street still holds high expectations for the company. Based on an average price target of $92.33, the stock is projected to rise 207% from its current level over the next 12 months.
Viking Therapeutics currently has no marketed products and generates no revenue, making the stock inherently high-risk. However, the company has a promising pipeline of investigational therapies, primarily focused on anti-obesity drugs. Currently, anti-obesity medications are among the hottest segments in the biotech industry. Zepbound, a leading approved weight-loss therapy, continues to post strong sales.
There remains significant untapped market potential. According to the Centers for Disease Control and Prevention (CDC), the obesity rate in the U.S. is approximately 40% (based on body mass index [BMI], a metric with certain limitations). However, recent studies accounting for BMI’s shortcomings suggest that around 70% of the U.S. population has obesity. But data show that only 12% of Americans are currently using GLP-1 drugs, and only 18% have ever used them. Regardless of which definition is used, this field is far from saturated.
Viking Therapeutics is targeting this unmet medical need. Its lead candidate, VK2735, is currently in two Phase 3 clinical studies: one for obese patients with diabetes and another for obese patients without diabetes. Both trials are fully enrolled, with a 78-week duration, and initial data may be released within the next 12 months. Positive results would serve as a major catalyst for the stock.
Notably, VK2735 performed well in Phase 2 clinical trials, achieving a mean weight loss of 14.7% after 13 weeks. Of course, Viking Therapeutics is not the only company trying to enter this space. The market is currently dominated by Eli Lilly (LLY) and Novo Nordisk (NVO), and several other major drugmakers are developing their own weight-loss drugs. If Viking’s efficacy data can match those of the top players, the market will reward the company handsomely.
Viking Therapeutics is also advancing other programs. The company is developing an oral formulation of VK2735, with a Phase 3 study expected to begin in the fourth quarter. Additionally, the company is conducting a maintenance study testing weekly, every-other-week, and monthly dosing regimens (following an initial weekly dosing period) to explore options for helping maintain weight loss. Furthermore, Viking has another anti-obesity therapy in the preclinical stage, with clinical trials expected to begin in the second quarter.
Over the next 12 months, progress on these programs could also boost the stock price, but the core focus remains the Phase 3 results for VK2735.
In summary, Wall Street’s optimistic outlook for Viking Therapeutics is primarily based on the potential of its investigational weight-loss drug VK2735 and the substantial unmet market demand. Nevertheless, while the stock could indeed see significant upward momentum if VK2735 delivers positive late-stage trial results, achieving Wall Street’s price target still carries considerable uncertainty. At the same time, if the Phase 3 results fall short of expectations, the stock could drop sharply. Therefore, Viking Therapeutics is a high-risk stock suitable only for investors who can tolerate significant volatility.
