Potential Eli Lilly and Novo Nordisk competitor surges 21% on third-quarter financials
Shares of the biopharmaceutical company Viking Therapeutics surged 21% on Thursday, October 24. The gains were attributable to released financial results for the third quarter, which showed that the company had sufficient financial resources to continue clinical trials for its promising weight-loss pill. If they are successful, Viking could eventually challenge current market leaders Novo Nordisk and Eli Lilly. Recall that earlier this month, Morgan Stanley included Viking in a list of small-cap stocks with at least 50% upside.
Details
On Thursday, Viking Therapeutics stock added 21.25% to close at $73.22 per share, its highest closing price since May 15. Since the start of the year, it is up 293%.
What’s behind Thursday’s gains
Viking Therapeutics released its third-quarter results on Wednesday, October 23. As of the end of the quarter, the company had $930 million in cash, which is enough to fund key clinical trials for its much-anticipated weight-loss drug, MarketWatch pointed out.
Amid no revenue (since all its products are still being tested), Viking posted a net loss of $24.9 million (or $0.22 per share). That was 8% better than the $0.24 per share loss expected by analysts polled by FactSet, as reported by MarketWatch.
In early November the company plans to release additional data from phase I clinical trials of its weight-loss pill, as well as phase II results of the injectable version. Preliminary data for the latter has been positive, showing statistically significant reductions in mean body weight relative to placebo, ranging up to 13.1%, along with relatively mild side effects. Initial results from the pill trials have also been upbeat.
Analyst insights
Truist, as reported by MarketWatch, called Viking’s obesity franchise “future-proof,” as none of its competitors have anything equally promising in their pipelines.
“We believe Viking has a potential best-in-class asset and is adequately financed to complete the next phase of development,” Maxim Group analysts Naz Rahman and Jason McCarthy wrote in a note quoted by MarketWatch.
Overall, since many people are afraid of needles, an oral weight-loss pill could be a game changer and a significant advantage for whichever company can develop it first.
According to MarketWatch, all 13 analysts covering Viking unanimously rate it a “buy.”
Context
In the middle of October, Morgan Stanley spotlighted Viking as one of 10 small caps with at least 50% upside. JPMorgan, back in September, estimated that Viking’s weight-loss tablets could capture around 10% of the obesity market, which is projected to grow to about $120 billion by 2030.
