1. Viking Therapeutics, Inc. (NASDAQ:VKTX)
Analyst Upside: 223.62%
Number of Hedge Fund Holders: 41
Viking Therapeutics, Inc. (NASDAQ:VKTX) is a clinical-stage company that develops therapies for metabolic and endocrine disorders. The first three quarters of fiscal 2024 proved productive for the company, with positive results across four of its clinical trials and promising initial results from its new preclinical program. These positive results came from its obesity programs, the treatment of NASH and fibrosis, and others.
The company’s lead program, VK2735, is a source of optimism for investors due to its long-term growth potential. VK2735 is a novel drug that targets glucagon-like peptide-1 (GLP-1) and glucose-dependent insulinotropic polypeptide (GIP) receptors. This combination improves metabolic benefits for conditions such as type 2 diabetes and obesity.
Viking Therapeutics, Inc. (NASDAQ:VKTX) has made considerable progress in VK2735 clinical trials, demonstrating significant weight loss results. This has increased investor confidence regarding its profitability. According to Research and Markets, the obesity treatment market is expected to grow at a compound annual growth rate of 10.24%, going from $18.88 billion in 2024 to around $33.93 billion in 2030. Since treatments like VK2735 deliver more significant weight loss and glycemic control, Viking Therapeutics, Inc. (NASDAQ:VKTX) is poised for long-term growth. Alger Mid Cap Focus Fund, in its fiscal Q2 2024 investor letter, stated that one-third of the US adults suffer from obesity, and they believe that Viking Therapeutics, Inc.’s (NASDAQ:VKTX) upcoming drug has the potential to address a large market.
Alger Mid Cap Focus Fund stated the following regarding Viking Therapeutics, Inc. (NASDAQ:VKTX) in its Q2 2024 investor letter:
“Viking Therapeutics, Inc. (NASDAQ:VKTX) is a clinical-stage biopharmaceutical company focused on developing novel therapies for patients suffering from metabolic and endocrine disorders. Their lead drug VK2809, a beta-selective thyroid hormone receptor agonist, is in development for nonalcoholic steatohepatitis and nonalcoholic fatty liver disease. Their VK2735 drug is a GLP-1 dual agonist being developed for patients with obesity. During the quarter, the company’s shares were negatively impacted by several factors: 1) a challenging environment for biotechnology stocks, exacerbated by Fed policy decisions to maintain elevated interest rates, 2) increased competition in the obesity treatment landscape, 3) manufacturability and scalability concerns regarding Viking’s obesity drug and 4) the absence of strategic partnerships from large pharmaceutical companies. Despite the challenging quarter, we continue to believe that the company’s GLP-1 drug has the potential to be a best-in-class obesity drug given its favorable efficacy and safety profile. Further, with approximately one-third of U.S. adults suffering from obesity, we believe the company’s GLP[1]1 drug has the potential to address a large market once approved.”
Overall, VKTX ranks first among the 12 biotech stocks with the biggest upside potential. While we acknowledge the potential of biotech stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VKTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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