Viking Therapeutics’ inventory greater than doubles as traders cheer low cost entry to weight-loss-drug craze

Viking Therapeutics Inc.’s inventory soared 121% Tuesday to shut at a document excessive, after the corporate introduced constructive outcomes from a Phase 2 trial of its weight-loss drug VK2735, a GLP-1 receptor agonist that it’s creating in each injectable and oral kind as a remedy for weight problems and diabetes.

The inventory
additionally notched its biggest-ever one-day proportion acquire. Volume of about 58 million shares was the best since March 28, 2023, when 62.7 million shares have been traded.

Maxim analysts raised their worth goal to $120 from $50 beforehand on the news.

The trial met all main and secondary endpoints, exhibiting statistically important reductions in physique weight in any respect doses in contrast with placebo, the corporate mentioned.

Patients receiving weekly doses of the drug subcutaneously misplaced as much as 14.7% of their physique weight from baseline after 13 weeks. The remedy was secure and well-tolerated with 95% of hostile occasions that have been principally gastrointestinal deemed gentle or reasonable. Most hostile occasions occurred early within the trial and sufferers recovered rapidly.

“Up to 88% of patients in VK2735 treatment groups achieved >=10% weight loss, compared with 4% for placebo,” Viking mentioned in an announcement.

Viking is planning to fulfill with the Food and Drug Administration to debate subsequent steps and hosted a convention name at 8 a.m. Eastern Time with additional particulars.

Also learn: Eli Lilly launches dwelling supply of weight problems drug Zepbound — however warns in opposition to its use for beauty weight reduction.

The news cheered traders searching for a less expensive entry to the weight-loss drug pattern than supplied by the 2 leaders within the subject, Eli Lilly & Co. Inc.
and Denmark’s Novo Nordisk.


Viking’s inventory closed at $$85.05, after a Monday shut simply above $38. Eli Lilly ended at $765, whereas Novo Nordisk’s ADR completed the session above $122.

Viking’s inventory can’t but be evaluated by conventional ahead price-to-earnings or price-to-sales ratios. Consensus estimates amongst analysts polled by FactSet have been detrimental by 2026, earlier than the market open on Tuesday. Consensus gross sales estimates for Viking by 2026 have been zero for 2024, $1 million for 2025 and $58 million for 2026.

Ten analysts working for brokerage corporations polled by FactSet cowl Viking and all have purchase scores on the inventory. The estimates could also be modified considerably over coming days to mirror Tuesday’s news.

Based on Monday’s closing costs, the ahead price-to-earnings ratio for Eli Lilly was 57.7. The ahead P/E for Novo Nordisk’s Class B American depositary receipts was 35.7.

By comparability, weighted ahead P/E ratios have been 20.6 for the S&P 500, 19.6 for the S&P 500 healthcare sector, 17.4 for the S&P 500 biotechnology sector trade group and 19.5 for the S&P 500 pharmaceutical trade group, in line with FactSet.

William Blair mentioned the info exhibits that VK2735 outperformed even the best expectations.

“It is our view that the magnitude of placebo-adjusted weight-loss of 13.1%, at the highest 15 mg dose, reflects a best-in-class profile among approved and investigational agents with Phase II data,” analysts Andy Hsieh and Alexandra Ramsey wrote in a notice to shoppers.

The notice acknowledged that there are limits on evaluating throughout trials, however Lilly’s Zepbound confirmed a roughly 8% placebo-adjusted weight reduction over 12 weeks.

“While we eagerly await full data that will be presented at a future conference (likely American Diabetes Association conference, June 21-24), we are shifting our stance to believe VK2735 has the potential to exhibit a potentially better efficacy profile relative to Zepbound (previously, our base case was that they are clinically equivalent),” they wrote.

Viking’s injectable and oral therapies use the identical mechanism as Novo Nordisk’s Wegovy and Ozempic and Lilly’s Mounjaro, mimicking the consequences of GLP-1, a intestine hormone that may assist management blood-sugar ranges and scale back urge for food. GLP stands for glucagon-like peptide.

The Phase 2 trial concerned 176 adults who’re overweight or obese, with no less than one weight-related comorbid situation. That was elevated from an unique plan to enroll simply 125 sufferers, because of heightened clinician and affected person pursuits, Chief Executive Brian Lian informed analysts on the decision.

Statistically important variations in contrast with placebo have been maintained by the course of the examine and weight reduction gave the impression to be progressive and didn’t present proof of plateauing, he mentioned.

The firm continues to be anticipating knowledge from the trial of an oral model of VK2735 later this quarter, mentioned Lian. Analysts are excited a couple of capsule model of the drug, which might be far simpler for sufferers to handle than the present injectable variations.

Read additionally: Eli Lilly’s quarterly outcomes prime estimates as weight problems, diabetes medicine acquire insurance coverage protection

Viking can also be creating a remedy for NASH, or nonalcoholic steatohepatitis. NASH is a extra extreme model of nonalcoholic fatty liver illness, or NAFLD, a spread of situations that happens when extra fats builds up in liver cells.

NASH is the primary cause that sufferers require liver transplants and there are excessive hopes for the therapies at the moment in growth.

Lian mentioned the mechanism behind VK2735 “seems to be applicable” to be used in NASH, and which may be a further indication for the remedy.

“I think for now we’re going to direct our resources into obesity, but that would be one obvious indication that could see some some some benefit from the mechanism,” he informed analysts, in line with a FactSet transcript.

 For extra, see: Inside the NASH drug increase: New medicine for a ‘silent’ liver illness that impacts thousands and thousands close to FDA approval

The inventory has gained 674% within the final 12 months, whereas the S&P 500
has gained about 28%.

The excessive ahead P/E ratios for Elli Lilly and Novo Nordisk mirror analysts’ expectations for continued speedy will increase within the corporations’ gross sales and earnings. Here’s a comparability of anticipated compound annual development charges (CAGR) for the businesses, the S&P 500 and three trade teams by 2025:

Company Ticker Estimated gross sales CAGR from 2023 by 2025 Estimated EPS CAGR from 2023 by 2025
Eli Lilly and Co. LLY,
21.8% 68.6%
Novo Nordisk A/S ADR Class B NVO,
20.7% 22.5%
S&P 500 SPX 5.4% 12.1%
S&P 500 healthcare sector 6.4% 14.1%
S&P 500 biotechnology trade 4.0% 9.6%
S&P 500 pharmaceutical trade 5.8% 26.7%
Source: FactSet

Additional reporting by Philip van Doorn.

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