Investors were concerned about tolerability and dropped out rates when Viking Therapeutics Inc. (NASDAQ:VKTX) released new data on its orally administered obesity drug. Shares fell sharply as a result.
A Phase 2 study showed positive results in weight loss, however a discontinuation rate of 28% within the first 3 months raised concerns about its long-term viability.
Investors questioned the ability of Viking Therapeutic to compete against sector leaders Eli Lilly, Novo Nordisk and others.
Justin Zelin is a senior BTIG Analyst and believes that the VKTX price movement has been “overdone”. This creates a great opportunity for investors to buy long term.
VKTX Stock is an enraged buy after the post-trial data weakness
Justin Zelin said that Viking Therapeutics mid-stage results for their oral obesity pills were comparable to, or even better than, Lilly’s and Novo Nordisks.
He said that the dose escalation by the company in this trial was uncharacteristically aggressive, leading to tolerability problems which are not likely to last.
BTIG’s analyst predicts that the company will use a more gentle dosing approach in Phase 3 to improve patient retention.
Zelin claimed that Viking’s drug is still the best in class. He cited mid-dose cohorts which showed efficacy against oral obesity candidates of LLY and NVO.
Investors, in his opinion, are overreacting and undervaluing the strengths of this trial. Zelin reiterated today his “buy’ rating for VKTX with a $125 price target, indicating a 450% upside potential.
Viking Therapeutics oral obesity pill is still commercially viable
Zelin emphasized Viking Therapeutics maintenance dose data on ” The Exchange“.
The results of the study show that patients who reduced their dose from 90mg down to 30mg still lost weight after 13 weeks. This is a “very compelling” result, which supports an scalable model for cost-of goods and increases long-term viability.
The BTIG Analyst recommends purchasing the Viking Therapeutics share dip because 99% gastrointestinal side effects are mild or moderate, and resolve by the third week. This suggests that tolerability fears may be exaggerated.
Viking Therapeutics may be a great long-term investment
Zelin, a Zelin analyst believes that VKTX’s Phase 3 dosing plan has not been finalized. The company will likely use the lowest dose possible to reduce the risk of dropout and improve real-word compliance.
While Viking Therapeutics mid-stage data from its clinical trials for an obesity pill caused concern, analysts such as Justin Zelin believe that the narrative is misunderstood.
He believes that the current sell-off is a result of short-term concerns, and not fundamentals. Viking is a viable competitor in the oral obesity market due to its competitive efficacy and scalable dosage.
Investors willing to ignore headline risks may find that the current decline in VKTX share prices offers an entry point for investors ahead of phase 3 clarity.
Even the Street’s lowest price goal for the biotech stocks is $29, which indicates a potential “upside” of almost 20%.
As new information becomes available, this post may change.
