With Viking Therapeutics (NASDAQ: VKTX) inventory exploding skyward by 528% during the last 12 months, it is simple to surprise if the chance to purchase its inventory is simply too good to be true — and a bit too late.
However on this case, there’s really a well-grounded argument for why shares of this younger biotech might go fairly a bit increased for many who are prepared to retain them for the following few years or past. Here is what that you must know.
Why this firm could be very interesting
The investing thesis for Viking Therapeutics rests on its prospects of creating a medication that may successfully assist individuals with weight problems to shed some pounds.
Per the outcomes of its section 2 medical trial, launched on Feb. 27, Viking’s weight problems remedy candidate, VK2735, seems to be extremely efficient and fairly secure to make use of. Although the main points shall be fleshed out a bit extra in bigger cohorts within the upcoming section 3 trials, and the prospect of regulatory approval on the market remains to be distant, this system at the moment seems to have a robust shot at each securing regulatory approval and securing a big market share within the more and more aggressive weight problems therapies market.
And on condition that the market’s reigning champions, Eli Lilly and Novo Nordisk, are so overwhelmed by demand for his or her weight-loss medicines that they’ll hardly broaden their manufacturing capability rapidly sufficient, there’s a good likelihood that Viking will be capable of maintain some floor if it will get its remedy permitted sooner or later.
Nonetheless, it would not be stunning in any respect if the biotech was as an alternative acquired by a type of two gamers or one other main biopharma firm properly earlier than getting its remedy permitted. Forging licensing offers or different late-stage collaborations are additionally each on the desk. However do not take the potential of performing some enterprise growth offers to imply that Viking is brief on money, as a result of the other is true.
As of the fourth quarter of 2023, it had $362 million in money and marketable investments. It additionally simply closed a brand new inventory providing on March 4 that was value gross proceeds of $632 million. Its trailing-12-month whole bills had been $101 million, and its debt load is negligible.
This firm has greater than sufficient cash in its coffers to wrap up VK2735’s medical trials and commercialize it, even when it runs into a couple of severe setback with regulators or medical knowledge alongside the way in which.
The pipeline is not a one-trick pony, both. Its ongoing section 2b medical trial for treating metabolic dysfunction-associated steatohepatitis (MASH, previously often known as non-alcoholic steatohepatitis or NASH) — a illness of the liver — finally might doubtlessly enter an uncontested and huge market, which might ship the inventory aloft too.
You will pay the hype tax when you purchase now
Regardless of its very promising medical trial outcomes, rock-solid stability sheet, and a good pipeline, there’s one main draw back to purchasing this biotech inventory proper now.
With its shares bid up considerably due to the latest flurry of stories, traders who begin a place in Viking Therapeutics within the subsequent few weeks and months shall be paying a reasonably penny for the privilege. It’s distinctly doable that the inventory’s excessive valuation might have bother protecting tempo with actuality, even when the biotech manages to commercialize its weight problems candidate. Moreover, there’s an argument that claims the one place {that a} inventory can go after such a wild run-up is straight down.
There may be additionally a danger that its section 3 medical trial knowledge will not look as favorable as its section 2 knowledge did. As of now, there is no purpose to assume that is perhaps the case, however it’s all the time a chance.
Lastly, there’s a danger that the corporate will not be capable of safe a house available in the market if it will definitely will get a product permitted. The presence of voracious and highly effective rivals like Eli Lilly and Novo Nordisk is likely a risk, even within the context of the large marketplace for weight reduction therapies.
Nonetheless, Viking seems to be like a really interesting funding proper now, except for the hype difficulty. Due to this fact, it is value shopping for in case you have the persistence to carry it over the following few years, in addition to the data that there is perhaps some ache alongside the way in which if the hype bleeds off sharply.
Must you make investments $1,000 in Viking Therapeutics proper now?
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Alex Carchidi has no place in any of the shares talked about. The Motley Idiot recommends Novo Nordisk. The Motley Idiot has a disclosure coverage.
Is Viking Therapeutics Inventory a Purchase? was initially revealed by The Motley Idiot