We recently compiled a list of the 7 Best Diabetes Stocks To Buy Now. In this article, we are going to take a look at where Viking Therapeutics, Inc. (NASDAQ:VKTX) stands against the other diabetes stocks.
According to the WHO, approximately 422 million individuals globally suffer from diabetes, with the majority residing in countries with low or middle incomes. Diabetes is directly responsible for an average of 1.5 million fatalities annually. Over the past few decades, there has been a steady rise in both the number of cases and the prevalence of diabetes. On the other hand, the International Diabetes Federation estimates that there are about 500 million diabetics worldwide, and that figure is projected to grow by 25% by 2030 and by 51% by 2045.
To help manage diabetes, both type 1 and type 2, one particular kind of medical device used is the continuous glucose monitor (CGM). The market has grown dramatically in recent years, and it has become a rapidly expanding section of diabetes care devices. The market for advanced diabetes care products — insulin pumps, pens, and continuous glucose monitoring (CGM) equipment, was estimated to be worth $21.8 billion in 2023 per GlobalData. Forecasts from GlobalData indicate that the market will reach revenues of $33.4 billion by 2030, rising at a CAGR of 6.34% over the forecast period.
As per the GlobalData marketed products database, the CGM category presently has 97 products. The vast majority of these devices are traditional CGMs, with only a few implantable sensors. According to the GlobalData pipeline products database, 133 products are either under development or approved. The figures show that this market segment is expanding quickly and is a hub for innovative new technology like implantable CGMs.
Today, CGM technology is also integrating AI. For example, Roche recently introduced new predictive AI-powered CGM technology (Accu-Chek SmartGuide). During the unveiling, Chief Medical Officer Julien Boisdron of Roche Diabetes Care referred to it as “a solution more than a CGM.” He described how the solution, which consists of two programs and a sensor, aids in both data visualization and prediction.
A new era of possibility has dawned in diabetes management and its associated complications. These novel techniques present significant opportunities for treating the combined problems associated with diabetes and obesity. A class of drugs called glucagon-like peptide-1 (GLP-1) agonists is used to treat obesity and type 2 diabetic mellitus (T2DM). As mentioned in our article, “10 Best GLP-1 and Weight Loss Stocks to Buy Now,” by 2030, the GLP-1 market, driven equally by obesity and diabetes, is expected to reach $100 billion. Thirty million GLP-1 users, or around 9% of the US population, may be on the medication by 2030.
The latest KFF Health Tracking survey indicates that 12% of American adults claim to have used a GLP-1 medicine at some point. Over the last half-decade, patients with diabetes now account for 43% of GLP-1 prescription users, while 22% of patients with obesity or overweight diagnoses also take the treatment. Adults who have heard “a little” or “a lot” about these drugs have gone from 70% to 82% over the past year, while those who have heard “a lot” or “a lot” about them have increased from 19% to 32%.
However, there are now difficulties as a result of the increased demand for these diabetes and weight reduction medications. A potential “explosion in the unlicensed sale of medication online” was indicated by the National Pharmacy Association (NPA). Semaglutides under the brand name Ozempic help individuals with type 2 diabetes control their blood sugar levels, but in some countries, such as the US under the brand name Wegovy, they are also widely used to help patients lose weight.
NPA chairman Nick Kaye stated:
“Pharmacists remain deeply concerned that the current medicine shortages crisis could lead to an explosion in the unlicensed sale of medication online.”
Methodology:
We sifted through holdings of ETFs exposed to the diabetes care industry and financial media to form an initial list of 20 diabetes stocks. Then we selected the 7 stocks that had the highest upside potential and market caps above $2 billion. The stocks are ranked in ascending order of the upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
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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%.
Overall VKTX ranks 1st on our list of the best diabetes stocks to buy. While we acknowledge the potential of VKTX as an investment, 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. This article is originally published at Insider Monkey.