Viking Therapeutics recently shared the findings from an early-stage clinical trial for their drug candidate VK0214. Viking Therapeutics, whose stock symbol is VKTX, has experienced a significant increase in its stock value throughout the year, driven largely by high expectations for its weight loss treatment, VK2735. Although the company has not yet brought an approved product to market and lacks steady revenue, the optimism surrounding VK2735, a GLP-1 treatment, has propelled the company’s valuation to over $7 billion.
Viking’s interests extend beyond the development of VK2735. The company recently presented encouraging news to investors regarding its potential for future growth. On October 9, Viking announced positive results from an early-stage trial of VK0214. The 28-day trial demonstrated VK0214’s effectiveness in reducing plasma levels of very long-chain fatty acids in patients with X-linked adrenoleukodystrophy, a rare genetic disorder affecting 1 in 17,000 births. The trial also confirmed that the treatment was safe and well-tolerated, a crucial outcome for an early-stage trial.
For Viking’s investors, VK0214 represents another promising treatment that could significantly contribute to the company’s future growth. However, there remains a significant timeline before VK0214 can achieve regulatory approval, as further clinical trials are necessary. The addition of VK0214 to Viking’s portfolio helps diversify the company’s growth strategy and mitigate risks for investors.
In addition to VK2735 and VK0214, Viking’s pipeline includes VK2809, a potential treatment for nonalcoholic steatohepatitis (NASH), which has demonstrated efficacy in a phase 2 trial by reducing liver fat. VK2809 could be another key therapeutic development for Viking.
Biotech companies often face challenges in securing the resources needed for clinical trials and drug development, which can lead to share offerings and dilution, affecting stock performance negatively. However, Viking Therapeutics is in a strong financial position that reduces these concerns. As of the end of June, the company reported having $942 million in cash and short-term investments, which is sufficient to cover its operating cash burn of approximately $72 million over the past 12 months. Even if spending increases, Viking appears well-positioned to maintain this financial level for several years.
With its robust financial standing, Viking Therapeutics is considered one of the more reliable investments in the biotech sector currently. Viking Therapeutics has experienced substantial stock growth, with shares rising over 240% so far this year. If any of its drugs receive regulatory approval, the stock could potentially rise further, especially if this approval leads to revenue generation and profitability for the company. However, the timeline for approval and revenue generation is uncertain, as biotech companies often face delays in receiving regulatory approval. For investors comfortable with this risk and willing to wait for potential revenue, Viking Therapeutics may be a growth stock worth considering for their portfolio. Despite its considerable gains this year, Viking Therapeutics may still possess significant upward potential if one of its drugs gains approval from regulators.
