1. Viking Therapeutics, Inc. (NASDAQ:VKTX)
Analysts’ Upside Potential: 98.90%
Following the news that its experimental weight reduction injection, VK2735, will move forward to a late-stage trial sooner than expected, Viking Therapeutics, Inc. (NASDAQ:VKTX) saw a 28% increase in share price on July 25. The biotech company based in San Diego has reached a noteworthy milestone as it gets closer to joining the profitable GLP-1 market, which is expected to reach $150 billion by the end of the decade, according to analysts.
Following the encouraging findings of a phase two study in February, Viking initially intended to carry out another mid-stage experiment. Surprisingly, in the most recent earnings call, CEO Brian Lian disclosed that the company would skip this step and go straight to a phase three trial, citing positive feedback from the FDA. This choice may shorten the development schedule for VK2735 by one year, and analysts are now projecting a possible 2029 launch into the market.
Viking Therapeutics, Inc. (NASDAQ:VKTX)’s rapid development puts it up against two big players in the market, including Eli Lilly and Novo Nordisk, whose GLP-1-based diabetic and weight loss medications have recently taken over the market over the past two years. The former’s stock fell more than 4%, and the latter’s price fell about 3% immediately following the announcement of the phase three trial.
In trials, VK2735 has demonstrated encouraging outcomes, with patients losing as much as 14.7% of their body weight in just 13 weeks. In addition, Viking intends to try a monthly dose schedule, which would be a more practical option than the current weekly treatments. The company is also working on an oral version of VK2735, which showed a 3.3% reduction in weight during early trials. Viking is ready for a significant year ahead of it as it gets ready for a meeting with the FDA in the fourth quarter.
However, Baron Health Care Fund stated the following regarding Viking Therapeutics, Inc. (NASDAQ:VKTX) in its Q2 2024 investor letter:
“Another source of weakness in the sub-industry was Viking Therapeutics, Inc. (NASDAQ:VKTX), whose shares pulled back after increasing nearly 300% in the prior quarter. Viking develops metabolic disease medicines with focus on diabetes/obesity and MASH (metabolic steatohepatitis, i.e., fatty liver). The company’s lead asset is VK2735, an injectable and oral version of a GLP-1/GIP combination weight loss medication that directly competes with Lilly’s Mounjaro/Zepbound. Both of Viking’s main assets appear to be more efficacious than their competitors’ in two exceptionally large revenue end markets. Viking’s stock detracted as biotechnology specialists have leaned into an alternative mechanism for obesity called amylin inhibition and don’t view the company as an attractive acquisition target (an opinion we disagree with). The recent rebalance of the well-known SPDR S&P Biotech ETF (XBI) also pressured Viking’s share price due to forced selling by many long/short strategies to reweight their positions.”
Nonetheless, it is the best diabetes stock to buy right now since nine analysts have collectively rated the stock as a “strong buy.” The average price target of $111.78 indicates a possible gain from the current stock price of $56.20 of 98.90%.
While we acknowledge the potential of the 7 Best Diabetes Stocks To Buy Now, our conviction lies in the belief that some 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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Disclosure: None. 7 Best Diabetes Stocks To Buy Now was originally published on Insider Monkey. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
