Is Viking Therapeutics Stock Poised to Create Millionaires?

Is Viking Therapeutics Stock Poised to Create Millionaires?

There aren’t many hotter stocks in the market right now than Viking Therapeutics (NASDAQ:VKTX). Shares of the biopharmaceutical company have soared about 340% so far this year.

However, these impressive gains could be just the beginning for Viking. The company should have many potential catalysts over the next few years. Could Viking Therapeutics stock become a millionaire?

Viking’s promising pipeline

Investor enthusiasm for Viking Therapeutics reached a fever pitch on February 27, 2024, when the company announced results from a Phase 2 clinical study evaluating VK2735 in obese patients. Viking reported that its investigational drug helped patients achieve an average placebo-adjusted weight loss of up to 13.1% after 13 weeks of treatment. This reflected faster weight loss than Novo Nordisk‘s Wegovy and No Lilly‘s Zepbound performed in their clinical trials.

Importantly, VK2735 also demonstrated a good safety and tolerability profile. Only 13% of patients receiving the drug stopped treatment in the phase 2 study, compared to 14% on placebo. Most reported side effects were mild or moderate in intensity.

Viking followed up a few days ago on positive results from a phase 1 study on an oral formulation of VK2735. Patients receiving the pill experienced an average placebo-adjusted weight loss of up to 3.3% after 28 days. The company believes a higher dose administered over a longer period of time could result in greater weight loss.

VK2735 isn’t the only promising candidate for Viking’s pipeline. The biotech is also evaluating VK2809 in a Phase 2b study as a treatment for nonalcoholic steatohepatitis (NASH), also known as metabolic dysfunction-associated steatohepatitis (MASH). Viking announced in 2023 that the study had achieved its primary goal of a statistically significant reduction in liver fat. It plans to release additional results from the study in the first half of 2024.

Additionally, the company is testing VK0214 in a Phase 1b study targeting X-linked adrenoleukodystrophy (X-ALD), a rare neurodegenerative disease. Viking is on track to publish the results of this study by mid-2024.

A millionaire action?

There’s no doubt that Viking could be a millionaire stock with enough money invested up front. After all, an investment of $800,000 would turn into $1 million with a gain of only 25%. But is it possible for the biotech stock to turn a more modest initial investment of $25,000 into $1 million? Maybe.

Goldman Sachs predict that the obesity drug market could exceed $100 billion by 2030. Similarly, some analysts believe that the global NASH/MASH market could exceed $100 billion by 2030. The market of X-ALD will likely be much smaller, however, because the rare disease affects relatively few patients.

If we assume that Viking could ultimately capture a 25% market share in the areas of obesity and NASH/MASH, the company would potentially generate annual revenue in the range of $50 billion. Using an average price/sales ratio of 6 (close to the current level for biotech stocks) would give Viking a market cap of $300 billion in this scenario. With Viking’s market cap currently hovering around $8.5 billion, this translates to a gain of nearly 35.3x.

An initial investment of $25,000 with this level of return could grow to over $880,000. It’s not enough to make you a millionaire. However, an initial investment of around $28,300 would turn into $1 million if multiplied by 35.3.

Some major hypotheses

As we have seen, it is not excluded that Viking Therapeutics’ stock could become a millionaire. However, some important assumptions may not materialize.

Analysts may be overly optimistic about the projected size of the obesity drug and NASH/MASH markets. I think this is especially true for the NASH/MASH market due to the challenges of diagnosing the disease.

Viking faces several obstacles to capture 25% of both markets. For one, its drugs have yet to gain regulatory approvals. Many well-funded competitors are also interested in the obesity and NASH/MASH markets. These rivals could develop drugs better than Viking’s.

I wouldn’t bet on an initial investment of $28,300 turning into $1 million. However, I like the risk-reward proposition that this biotech stock offers. Even though it’s not a millionaire manufacturer, it could still make a lot of money for aggressive investors if all goes well in the remaining clinical trials for VK2735 and VK2809.

Should you invest $1,000 in Viking Therapeutics right now?

Before buying Viking Therapeutics stock, consider this:

THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and Viking Therapeutics was not one of them. The 10 selected stocks could produce monster returns in the years to come.

Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor The service has more than tripled the performance of the S&P 500 since 2002*.

See the 10 values

*Stock Advisor returns as of April 1, 2024

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.

Could Viking Therapeutics Stock Become a Millionaire? was originally published by The Motley Fool

Source Reference

Latest stories