Viking Therapeutics Inc., the clinical-stage biotechnology company that wowed investors this week with promising data from a mid-stage trial of a weight-loss drug, is bolstering its balance sheet by issuing new shares.
The company that owns VKTX shares,
The stock has gained an impressive 129% for the week so far, offering $550 million of 6.47 million shares at $85 a share late Wednesday, a discount from its closing price of $94.50.
Proceeds will be used for further development of the weight loss treatment VK2735 and the NASH drug VK0214 and for research and development, working capital and general corporate purposes.
The stock fell 9% early Thursday in the usual pattern after a secondary offering that diluted existing shares.
Viking released data from its phase 2 trial dubbed Venture on Tuesday, sending its shares soaring 121% to a record high it broke on Wednesday. The stock is seen as a cheaper entry for investors who want to get into the obsession with the new class of drugs, since the two leading companies in the space, Eli Lilly & Co. LLY,
And the Danish company Novo Nordisk NVO,
new.b,
It has become relatively expensive.
VK2735 is Viking's GLP-1 receptor agonist that is being developed in injectable or oral form as a treatment for obesity and diabetes. It used the same mechanism as Wegovy, Ozempic, and Lilly's Mounjaro, to mimic the effects of GLP-1, a gut hormone that can help control blood sugar levels and reduce appetite. GLP stands for glucagon-like peptide.
Analysts praised the data and said the company had become an attractive target for major pharmaceutical companies.
“The GLP-1/GIP space is ultimately a large/mega-pharma space, in our view,” Maxim analysts Naz Rahman and Jason McCarthy said.
“Viking should have a partnership for potential late-stage commercialization or development. Given the competitive nature of the product and growing market, we believe this increases Viking's attractiveness as a potential acquisition target with Viking's NASH program being on the upside.”
All 10 analysts surveyed by FactSet have a Buy or equivalent rating on the stock, although Viking does not yet have a fully approved product on the market.
Jefferies analysts filed a cautionary note on Wednesday with a note to clients suggesting that Viking's drug is unlikely to hit the market until 2029+. But analysts led by Akash Tiwaria acknowledged that the trial data was impressive.
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