Is Viking Therapeutics Stock a No-Brainer Buy Below $35?
Key Points
Viking Therapeutics is running phase 3 studies for its leading anti-obesity candidate.
Its shares could soar from current levels, provided everything goes according to plan.
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Shares of Viking Therapeutics (NASDAQ: VKTX), a clinical-stage biotech, have moved in exactly the wrong direction this year, down 8% to date. However, the drugmaker has important catalysts on the horizon that could make the stock a bargain at its current price of $32 per share. Should investors initiate positions today?
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An intriguing weight loss play
Viking Therapeutics is developing medicines for chronic weight management. The company's leading candidate, subcutaneous VK2735, is currently in phase 3 studies. We should see data from these trials next year. On the one hand, subcutaneous VK2735 posted strong phase 2 results, and if it can repeat that performance in its ongoing clinical trials, Viking Therapeutics' shares will soar.
Further, the biotech has other promising candidates, including an oral formulation of VK2735 for which it could start late-stage studies by year-end. That said, the anti-obesity landscape has evolved since Viking Therapeutics revealed phase 2 clinical trial data for subcutaneous VK2735. And there will be more progress -- including more phase 2 and phase 3 assets that will complete clinical trials -- over the next year or so.
That means the bar to impress Wall Street is now higher. That's not surprising: given that the weight-loss field is projected to grow rapidly over the coming decade, many pharmaceutical leaders are looking to carve out a niche. Where does that leave Viking Therapeutics? The stock is an intriguing -- albeit fairly risky -- way to try to capitalize on this growing therapeutic area.
Provided VK2735 can post solid phase 2 and phase 3 results across both formulations, the biotech's shares will soar, arguably making it a bargain at current levels. But the company could just as well lose significant value over the next five years if it encounters setbacks. Investors comfortable with the risk and volatility should consider initiating a small position. Everyone else will want to look elsewhere.
Should you buy stock in Viking Therapeutics right now?
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Prosper Junior Bakiny has positions in Viking Therapeutics. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.
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