This GLP-1 Stock Could Double by 2030. Here's Why

Over the past five years, Viking Therapeutics' (NASDAQ: VKTX) shares have climbed more than 500% as the company has made significant progress with its leading pipeline candidates. The clinical-stage biotech is looking to establish itself in the fast-growing GLP-1 drug market. If it can make headway toward that goal through the end of the decade, Viking Therapeutics might once again deliver market-beating returns. Here is why the stock could double by 2030.

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A large and growing opportunity

Demand for GLP-1 products is soaring. Thanks to breakthroughs in the field and a large addressable opportunity in niches such as diabetes and weight management, the market for GLP-1 drugs could reach $190 billion by 2035, according to some estimates. For context, it was worth about $79 billion last year. While Eli Lilly (NYSE: LLY) and Novo Nordisk (NYSE: NVO) currently dominate this area, a first-mover advantage isn't everything. There is room for more differentiated GLP-1 medicines.

That's what Viking Therapeutics is working on. The company's pipeline includes subcutaneous VK2735, an investigational medicine currently in phase 3 clinical trials. The biotech company is also working on an oral version of VK2735 that could start late-stage clinical trials by the end of the year. Further, Viking Therapeutics said it would start phase 1 studies for another product, VK3019, in the second quarter.

While VK2735 mimics the actions of the GLP-1 and GIP hormones, VK3019 is a dual amylin and calcitonin agonist. This differentiated product could help Viking Therapeutics maintain a strong position in the weight-loss market as more GLP-1 medicines gain approval. The biotech could also seek to combine VK2735 and VK3019, thereby attacking obesity from multiple pathways, potentially yielding efficacy far stronger than current options.

The bull case for Viking Therapeutics

What would it take for Viking Therapeutics to double by 2030? The biggest catalyst will be progress with its leading candidate, subcutaneous VK2735. The medicine's ongoing phase 3 studies should be completed within the next 12 to 18 months -- and, if the results from these trials are strong, the therapy could earn approval by mid to late 2028 or so. However, clinical successes don't necessarily translate to the kind of commercial success investors want. The best-case scenario for Viking Therapeutics is for VK2735 to post phase 3 results that at least rival those of the current leader in the obesity drug market, Zepbound.

That would likely send the stock price soaring, as it would set Viking Therapeutics on a trajectory to generate billions in annual sales from its leading product. Progress with oral VK2735 through the next few years will also be important. Oral weight-loss medicines are expanding the market by attracting mostly patients who had never taken GLP-1s before. But their efficacy pales in comparison with that of subcutaneous medicines. Oral VK2735 posted highly impressive weight-loss numbers in a phase 2 study, but the study had high discontinuation rates due to the medicine's side effects.

If Viking Therapeutics can find a way to mitigate oral VK2735's side effects -- perhaps with a gentler titration schedule -- while maintaining its strong efficacy, that could be a game changer for the company. Lastly, encouraging early stage results for VK3019 may also slightly move the needle for Viking Therapeutics.

Hedge your bets

Could Viking Therapeutics really double by 2030? Yes, provided everything goes right. But how likely is that? In my view, there is a good chance subcutaneous VK2735 posts strong phase 3 results, but if it fails to do so, the stock will fall off a cliff. It will likely struggle to recover, especially since the company is currently valued at $4.4 billion, which isn't at all insignificant for a clinical-stage biotech. There is also the possibility that the GLP-1 market will not grow as quickly as some analysts currently project, or that there will be far more competition from pharmaceutical giants than expected.

Any of these outcomes could lead to much higher expectations for Viking Therapeutics' upcoming data readouts and make it harder for the company to impress the market. The bottom line is that Viking Therapeutics is on the risky side. Investors comfortable with volatility may add a small position in the stock to a well-diversified portfolio, but risk-averse investors will want to look elsewhere.

Prosper Junior Bakiny has positions in Eli Lilly, Novo Nordisk, and Viking Therapeutics. The Motley Fool has positions in and recommends Eli Lilly and Novo Nordisk. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.