Viking Therapeutics Stock May Struggle After As-Expected Report

Key Points

• Viking Therapeutics reported negative earnings per share of 41 cents due to increased spending on drug development and compensation.
• The company’s GLP-1 candidate VK2735 showed promising results in weight loss and is set for Phase 3 trials, with an oral version in Phase 2 trials expected to provide data in the second half of the year.
• VKTX stock is currently near its 50-day SMA, with potential for higher gains if the Phase 2 trial results for VK2735 are favorable, making it a candidate for a watchlist

Viking Therapeutics Inc. NASDAQ: VKTX reported earnings after the market closed on Apr. 23. The stock is pushing higher as investors attempt to sort out a report that delivered no real news that investors hadn’t heard.

The company, which is still in the pre-revenue stage, reported negative earnings per share of 41 cents. That was below the negative 34 cents per share that analysts had expected and below the negative 27 cents per share it delivered in the same quarter in 2024. The company also reported a slight drawdown in its cash, cash equivalents and short-term investments to $852 million.

The reason for the decline was straightforward enough. The company spent more money on manufacturing costs for drug candidates and clinical trials. The financials revealed that it also spent more on higher stock-based compensation and salaries.

In This Case, No News is No News

Viking Therapeutics stock climbed higher in March after the company released the results from its 13-week study for its GLP-1 candidate VK2735. The study showed that participants achieved 13.1% placebo-adjusted weight loss.

That was faster than Zepbound and Wegovy, the current GLP-1 obesity drugs from Eli Lilly & Co. NYSE: LLY and Novo Nordisk A/S NYSE: NVO, respectively. And the company announced it was on track to begin Phase 3 trials for VK2735 this quarter.

Viking is also testing an oral version of VK2735, which, although just starting Phase 2 trials now, could be a game-changer for patients who want to avoid painful injections. The company forecasts data from the study to be available sometime in the second half of the year.

However, Viking is in a race to get its oral version to market. Although it has a head start, larger companies that partner with other biotechs could pass it by.

However, the bigger news was that VK2735 achieved a 171-day half-life. This means that the drug could be administered once a month instead of the current weekly injection standard. 

Many patients have expressed a desire for less frequent dosing, either for cost reasons or discomfort with injections. This could also solve a vexing problem of how health insurers, particularly Medicare and Medicaid, will decide on reimbursement.

Viking Has Other Candidates in Its Pipeline

Any conversation about Viking in the last year has focused on its GLP-1 candidates, and with good reason. Obesity drugs have been among the few places where investors could make solid gains.

However, the company has two additional drugs that continue to move through the clinical trial stage. VK2809 is a treatment for NASH/MASH, which delivered successful primary and secondary endpoints in a Phase 2b trial. The company also has VK0214, which targets rare diseases. 

You Can Wait on VKTX Stock, But Have It on a Watchlist

VKTX stock did a quick round trip in after-hours trading before increasing. That could reflect the idea that the report was already baked into the stock price, which is up more than 7% in the five days ending Apr. 23.

At $25.84, the stock is within striking distance of its 50-day simple moving average (SMA) at around $27.11. A move past that level could start a longer rally. But with no new news due out, it’s likely to chop around at the current level, especially with short interest still being over 24% for the stock.

However, that could be a signal to investors to get involved. Investing in medical stocks is an inexact science. And there’s no guarantee that Viking will be able to get its candidates to market. However, the stock could shoot much higher if the company delivers a favorable readout of its Phase 2 trial for the oral version of VK2735.

This means there’s no urgent need to rush into a full position. However, for investors who believe VK2735 will be approved and could become the game changer many expect, it’s worth keeping on a watchlist to stay informed on clinical trial updates.