On Thursday, Viking Therapeutics (NASDAQ:VKTX) received a favorable initiation of coverage from Jefferies, with a Buy rating and a price target set at $110.00. The biopharmaceutical company, which focuses on therapies for metabolic and endocrine disorders, has recently reported positive Phase 2 results for its subcutaneous drug VK2735, intended for obesity treatment.
Viking's VK2735, a GLP-1/GIP agonist, demonstrated up to 13.1% placebo-adjusted weight loss at 13 weeks, outperforming competitors like Eli Lilly (NYSE:LLY)'s tirzepatide. Jefferies anticipates the potential for approximately $12 billion in peak-adjusted sales for VK2735 in the obesity market. This projection is bolstered by significant interest from larger pharmaceutical companies in the metabolic sector.
The company is also progressing with VK2809, a treatment for metabolic-associated steatohepatitis (MASH), which has shown promising liver fat reduction in early-phase trials. Investors are looking forward to the upcoming Phase 2 52-week biopsy data, expected to be released in the first half of 2024.
Jefferies highlighted Viking's strong position in the obesity treatment space, particularly after the recent Phase 2 data for VK2735. The firm believes that demand for advanced and less risky assets in this area exceeds the current supply. This "scarcity value," as referred to by Jefferies, positions Viking advantageously as it prepares for the first quarter 2024 readout of the oral VK2735.
The firm also noted that Viking's pipeline includes VK2809, with mid-year biopsy data anticipated, and VK0124, which is targeting X-ALD with Phase 1 data expected in the first half of 2024. These additional assets, which are currently considered undervalued, offer further upside potential to the company's stock.
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