If you have $5,000 at hand, Viking Therapeutics' stock has received a significant green signal recently.
With a staggering increase of over 531% within the past 12 months, shares of Viking Therapeutics (VKTX -3.56%) have turned into a coveted asset, without a doubt. And as early November rolls around, there's one extra positive sign pointing towards investors who venture in, potentially seeing their wealth increase further. Even an initial investment of $5,000 could witness a significant surge, assuming their strategy of entering the market for weight loss medications becomes successful in the upcoming years.
In light of this, let's examine why this stock merits consideration.
Its contender is becoming increasingly promising
You might be aware that Viking hasn't yet secured approval for any drugs for sale, but they do have a highly promising investigational drug designed to help individuals lose weight rapidly and securely. This positions them to directly contest key players like Eli Lilly and Novo Nordisk, who currently hold the majority share in the market for weight loss medications.
New statistics presented at the Obesity Week 2024 conference on Nov. 4, fortify the argument for purchasing Viking, as there's more proof that their primary candidate for tackling obesity, VK2735, will be capable of capturing a substantial share of the market should it get approved, even against resistance from established competitors.
VK2735 is currently being tested in two forms: a weekly injection and a daily pill. The pill version is anticipated to initiate its phase 2 clinical trials prior to the year's end, while the injected version is scheduled to embark on phase 3 trials shortly, subject to discussions with regulatory bodies.
At the conference, the company revealed that among healthy volunteers who received the highest dose of the pill version of VK2735 for 28 days, the average loss of body mass was 6.8%, while participants given placebo pills lost just 1.4%. The lost weight was also sustained for at least a month after the test concluded, mirroring similar outcomes from a trial regarding the injected formulation. Mild nausea was the most commonly reported side effect.
These results bolster the expanding body of evidence that Viking has a successful weight loss candidate at its disposal, effective in multiple formulations, representing a fresh green light for the stock. Management also hinted at the possibility that lower doses of the VK2735 pill could potentially aid patients in maintaining their lost weight over a longer period -- a critical functionality major competitors like Novo Nordisk and Eli Lilly are currently unable to offer.
One day, this could allow the business to generate revenue from patients for extended periods rather than just for the time it takes them to shed excess weight. And this long-term earning potential is yet another bullish aspect in favor of Viking.
There are not many obstacles to consider
In its third-quarter financial report, Viking reported $930 million in cash, cash equivalents, and short-term investments. Notably, they had zero long-term debt. Their operating expenses over the past 12 months totaled only $134 million. With these substantial resources, they're confidently able to progress both versions of VK2735 through their remaining clinical trials, and still have ample funds to invest in additional research and development (R&D) programs.
This strong financial position means that, should you invest $5,000 in this stock today, the risk of your shares being diluted by a new stock offering is minimized, even if you hold onto your shares for an extended period. Additionally, Viking has the financial means to manage minor hiccups with their clinical programs without incurring significant damage.
However, there are risks to consider as well. As market expectations for the revenue potential of the two VK2735 programs appear rather optimistic, the stock is susceptible to drastic deflation should any negative data emerge from the corresponding clinical trials. Regardless of the financial implications, this would adversely affect the stock's value.
Provided the company continues to impress, such a drop is unlikely. And with a fresh achievement under their belt, the odds of an investment today leading to a profitable return are favorable.
Based on the promising results of VK2735, investors might consider allocating a portion of their finance towards Viking Therapeutics, as the drug has the potential to capture a significant market share in weight loss medications, even challenging giants like Eli Lilly and Novo Nordisk. The company's financial strength, with $930 million in cash and no long-term debt, further enhances the investment appeal, as it ensures adequate funding for clinical trials and future R&D projects.
