The Skinny on Viking Therapeutics Trial Results? Still a Little Thin
Viking shows strong results in very early clinical trials, but earnings numbers look really bony, so let's see if this is an investment or a speculative trade.
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Both my weight and my blood pressure could be lower. That's why I watched the news closely this morning that Viking Therapeutics VKTX had reported promising results from an early stage trial for its experimental obesity pill. Patients dosed at 100-milligram of candidate VK2735 over 28 days lost an average of 8.2% in body weight, which was 6.8% more than those taking a placebo.
The information was released at an Obesity Week event that had been organized by the Obesity Society over the weekend in San Antonio, Texas. The phase 1 study included just 92 people taking a variety of dosage levels; 100-milligrams was the highest dosage tested at this time. No one stopped the test at the dose level with the most common side effect, according to Viking. Constipation, nausea and vomiting are the most likely side effects, which is similar to other obesity treatments already available.
What makes VK2735 different is that this candidate is administered orally. The obesity drugs already commercially available, that were developed as GLP-1 agonists by Novo Nordisk NVO and Eli Lilly LLY are both injectable, though both of those companies currently have oral versions of those drugs in clinical trials. Pfizer PFE and AstraZeneca AZN are also planning to compete for this potentially lucrative space.
Viking's VK2735 is also a GLP-1 agonist and is being planned to enter into Phase 2 trials prior to the end of 2024. It will meet with the Food and Drug Administration to discuss its clinical path forward not just for this oral therapeutic, but also for an injectable version of this drug as well.
Earnings Look Slim ...
Viking reported almost two weeks ago. For the third quarter, the company posted an undajusted loss per share of $0.22 on no revenue. That's right ... none. In fact, while the negative EPS did beat expectations, the company has not generated revenue this year. Operating income / loss for the quarter was negative $36.6 million. After interest, net income / loss came to negative $24.9 million.
Operating cash flow for the quarter printed at a $22 million loss, bringing us to the balance sheet. The company, as of the end of September, held a cash position of $930.4 million and current assets of $936.6 million. Current liabilities added up to just $25.7 million. That's a current ratio of 36.4, so while it's burning some cash, that could go on for years without slowing down operations. Viking has absolutely no debt on the books whatsoever.
Wall Street's Ratings
On this news, analyst Annabel Samimy of Stifel Nicolaus, who is rated four stars by TipRanks, reiterated both her "buy" rating and her $95 target price, while three-star rated analyst Michael Ulz reiterated both his "buy" target and $105 target. Five-star analyst Joon Lee of Truist
Financial assigned a "buy" rating to VKTX over the weekend as well but is yet to reveal a target price.
My Thoughts
Of course, this name is still speculative. While financially sound, Viking still has driven no sales and is competing against big pharma. In full disclosure, I had been day-trading this name this morning before I knew I was going to write about it. I halted my activity with a very small (odd lot) long position. I will not trade the stock again, until well after this piece hits publication.
Readers will see that Viking has been trying to break out from a triple bottom pattern of bullish reversal with a $70 pivot point. It had seemed to have had that breakout in the bag early this morning when it was trading with a $91 handle. At last glance, I see the shares trading with a $73 handle, so barely up on the morning.
Is this name tradeable? Of course, its been a great trading stock. Is it investable? That's a horse of another color. Not for investing fundamentalists with no sales to show and with huge competitors not far behind. For technical investors, only close to pivot, and then I would stay true to my 8% rule as I don't really trust this name just yet. For the new kids, my 8% rule is simple. Never, ever, ever allow oneself to take a hit of 8% or more on any one position unless it happens overnight while asleep.
At the time of publication, Guilfoyle was long VKTX equity.
