Viking Therapeutics Loses 20% in a Month: How to Play the Stock

Core Insights - Viking Therapeutics (VKTX) shares have declined over 20% in the past month, underperforming the industry growth of 1% and also lagging behind the sector and S&P 500 [1][9] - The decline followed mixed results from a mid-stage study of VK2735, an experimental obesity drug, raising concerns about its safety and tolerability despite achieving weight loss results [4][5][9] Company Pipeline and Development - VKTX is developing VK2735, a dual GLP-1 and GIP receptor agonist, showing potential in the obesity treatment space with both oral and subcutaneous formulations [6] - The phase II VENTURE study for the subcutaneous version of VK2735 met all primary and secondary endpoints, leading to the initiation of two late-stage studies expected to report results by late 2026 or early 2027 [7][8] - VKTX is also pursuing drugs for non-alcoholic steatohepatitis (NASH) and X-linked adrenoleukodystrophy (X-ALD), with promising clinical study results [10] Competitive Landscape - The obesity market is projected to reach $100 billion in the U.S. by 2030, with Eli Lilly and Novo Nordisk currently leading with their injectable drugs [11] - VKTX, along with its competitors, is racing to introduce oral weight-loss pills, with Novo's oral Wegovy under FDA review and Lilly's orforglipron showing positive late-stage study results [12][13] Financial Position and Valuation - VKTX lacks a stable revenue stream and faces significant cash burn due to ongoing clinical studies, which could impact its stock if setbacks occur [14] - The company is trading at a premium valuation, with a price/book ratio of 3.82 compared to the industry average of 3.09 [15] - Estimates for VKTX's loss per share for 2025 and 2026 have widened significantly in the past 60 days, indicating potential financial challenges ahead [17] Investment Outlook - Despite a strong cash position of $808 million and no debt, the lack of revenue and competition from larger pharmaceutical companies raises concerns for VKTX's stock [18] - The stock is currently rated Zacks Rank 4 (Sell), reflecting the challenges in justifying further investment at this stage [18]