Viking Therapeutics, NASDAQ: VKTX is a hot investment this week. Pfizer’s decision to discontinue the weight loss pill development due to a drug-induced liver damage has prompted investors into Viking Therapeutics.
Viking’s shares have gained % over the past few sessions, on speculation PFE is now looking to acquire to increase its presence in weight loss.
Viking Therapeutics has begun testing both an oral and an injectable GLP-1 medication.
Its stock price has fallen by nearly half this year. This makes it an even more appealing target for a possible takeover.
There are however, several reasons for Pfizer to decide against the VKTX purchase.
Pfizer’s other assets can help it penetrate the market for weight loss
Pfizer has been unable to enter the weight loss market immediately after Danuglipron failed.
The company has still two more candidates that are in the clinical trials.
The PF-07976016 is another anti-obesity daily drug. It operates through a different mechanism from danuglipron.
Danuglipron was able to mimic the GLP-1 hormonal system and help participants reduce their body fat. However, PF-07976016 from the company blocks GIP receptors instead of delivering the same result.
It’s therefore believable that Pfizer would prefer to focus on the testing and development its own assets in order to gain a foothold on the anti-obesity markets rather than spend billions of dollars on an acquisition.
Pfizer does not have enough VKTX dry powder
Pfizer may decide not to buy Viking Therapeutics due to financial concerns, but also for the immediate exposure it would gain on the rapidly growing market for weight loss drugs.
Since the COVID epidemic, multinationals have been buying up everything they can.
The company’s multi-billion dollar acquisitions have not only broadened the portfolio but also saddled it with significant debt.
PFE’s merger and acquisitions power is estimated at $10-15 billion, making it more difficult to make a major buyout such as VKTX by 2025.
The clinical risk of Viking’s weight loss drugs is still present because they are in phase 2 testing.
Pfizer would prefer to invest in later-stage assets, or other obesity drugs strategies than VKTX.
What is the value of Pfizer in 2025 stock?
Wall Street recommends stocking up at the current price.
PFE’s shares are currently rated “overweight” by the consensus.
The average analyst price target for the stock is $29.41, which represents a 35 percent increase from its current level.
Pfizer’s stock also offers an impressive dividend yield of 7,78%. This makes it a good option for passive income seekers, especially with the recession on its horizon.
Will Pfizer make a bid to buy out Viking Therapeutics? This post may be updated as new information becomes available
