Contemplating Purchasing a Dive in This Soaring Share?
This year has been quite the rollercoaster for Viking Therapeutics, or VKTX as it's known by its ticker symbol. After a stellar run in February, driven by impressive mid-stage clinical results, the biotech company has seen its stock take a tumble. In fact, it's dropped over 10% in a single day and 24% in the past month. But what's the cause of this recent decline? Let's dive in and find out.
A Tough Market and Internal Factors
Viking Therapeutics' promising candidate, VK2735, is a potential GLP-1 weight loss medicine that reported fantastic results in a phase 2 study. The company also has an oral version of VK2735 in the early stages of clinical trials. If successful, this oral version could offer a significant advantage over existing GLP-1 treatments, which are typically administered via injection.
However, it's not just Viking Therapeutics feeling the heat. On December 18, pharmaceutical giant Merck announced its intentions to enter the fast-growing anti-obesity field. It partnered with Hansoh Pharma to develop HS-10535, a pre-clinical oral GLP-1 weight loss candidate. Merck will make an upfront payment of $112 million to Hansoh Pharma and is eligible for milestone payments and royalties depending on HS-10535's success.
While Merck's entry into the weight loss market may have spooked some Viking Therapeutics shareholders, it's important to note that HS-10535 is still in its early stages. It will be years before we see any commercial applications of the drug.
Meanwhile, Viking Therapeutics' VK2735 and another candidate, VK2809, are on the cusp of starting phase 3 (late-stage) trials. Both showed promising results in mid-stage trials, although success in phase 3 studies is never guaranteed.
As for Viking's oral formulation of VK2735, it's ahead of the game. A more accurate comparison might be between HS-10535 and Viking's own pre-clinical weight loss program, a dual amylin and calcitonin receptor agonist. Should Merck's entry into the weight loss market be a cause for concern? Perhaps. But as with any biotech stock, Viking Therapeutics carries some inherent risk.
The Impact of Market Conditions
While Merck's entry into the weight loss market may have contributed to Viking Therapeutics' stock decline, it's not the only factor at play. The broader market has been volatile, with stocks trading lower than they were just a few days ago. Viking Therapeutics has seen reduced investor interest, as indicated by a 75% decline in trading volume from its average session volume.
The Opportunity in Volatility
Despite the recent decline, Viking Therapeutics remains one of the better competitor biotech companies in its space. For those willing to accept the inherent risks associated with investing in clinical-stage biotech stocks, the recent dip in Viking Therapeutics' stock price represents an opportunity.
Viking Therapeutics' finance department might be considering the impact of the broader market conditions on their stock, as the overall market has seen a volatile period with stocks trading lower than a few days ago. Thedecline in VK2735's stock could also be attributed to internal factors, such as reduced investor interest, as indicated by a 75% decrease in trading volume compared to the average session volume. Despite the recent struggles, Viking Therapeutics' promising candidate, VK2735, has shown fantastic results in a phase 2 study and has an oral version in the early stages of clinical trials, which could offer a significant advantage over existing GLP-1 treatments. Investors interested in the pharmaceutical sector might see this decline as an opportunity to invest in this promising biotech company.
