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Takeover speculation is rife in the industry, particularly with companies with promising obesity drug pipelines.
Management reassured investors that there could be substantial value in its lead drug candidate, VK2735.
Shares in Viking Therapeutics (NASDAQ: VKTX) rose by a whopping 44.9% in October, according to data provided by S&P Global Market Intelligence. The move occurred in three legs, and each one was preceded by positive news flow that encouraged investors to believe in the value of its lead drug candidate VK2735 (to treat obesity and those who are overweight and have type 2 diabetes).
The first leg up occurred early in the month and is the result of another round of takeover activity in the biotech industry. Pfizer tried to fill a hole in its obesity pipeline by agreeing to buy Metsera (NASDAQ: MTSR) (owner of an innovative pipeline of weight loss drugs) in late September, only for Novo Nordisk (NYSE: NVO) (itself a key player in the obesity market) to enter an as-yet unresolved bidding war with Pfizer over Metsera in October.
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Image source: Viking Therapeutics.
Naturally, such activity raises the question as to who's next? And who might be next in line for a bid when Pfizer or Novo Nordisk fails in the battle for Metsera? One answer could be Viking Therapeutics, not least as larger pharmaceutical companies often have a better record of taking promising drugs, such as VK2735, through late-stage clinical trials.
VK2735 is being tested in oral and subcutaneous (injectable under the skin) form. It disappointed investors with its safety and tolerability data (although efficacy was satisfactory) in a phase 2 trial (oral), which led the stock to sink in August.
However, the market was pleased on Oct. 21 when the company informed investors that it had initiated a phase 1 trial to explore the possibility of using VK2735 (oral) as a maintenance dose after patients receive VK2735 (subcutaneous). This helped convince investors there was still significant value in VK2735 (oral).
Finally, the company's third-quarter earnings results on Oct. 23 saw management confirm it had the resources to take VK2735 (subcutaneous) through phase 3 trials, and enrollment in that trial was ahead of schedule.
Enrollment in the two VK2735 (subcutaneous) phase 3 trials is expected to end by the end of 2025 and the first quarter of 2026. Given that the trials involve 78 weeks of treatment, the results won't be released until at least mid-2027. The phase 1 VK2735 (oral) dosing trial results are expected in the middle of 2026.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Novo Nordisk and Viking Therapeutics. The Motley Fool has a disclosure policy.
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