Viking Therapeutics Inc (NASDAQ: VKTX) reported new clinical data for its oral obesity drug – sending shares sharply lower as investors balked at tolerability concerns and dropout rates.
The Phase 2 trial showed promising weight loss results, but a 28% discontinuation rate in the first three months triggered fears about long-term viability.
Viking Therapeutic stock was cut in half on Tuesday as investors questioned its ability to compete with sector leaders Eli Lilly and Novo Nordisk.
However, senior BTIG analyst, Justin Zelin, maintains the VKTX share price action is “overdone” and has created a compelling buying opportunity for long-term investors.
Why VKTX stock is a raging buy on post-trial-data weakness
According to Justin Zelin, Viking Therapeutics’ mid-stage data for its oral obesity pill was actually comparable, if not better, than Lilly or Novo Nordisk’s.
In an interview with CNBC today, he said the company’s dose escalation in the trial was unusually aggressive – leading to frontloaded tolerability issues that are unlikely to persist.
The BTIG analyst believes the company will adopt a gentler dosing strategy in Phase 3, improving patient retention.
Citing mid-dose cohorts that showed competitive efficacy versus oral obesity candidates from LLY and NVO, Zelin argued Viking’s drug remains class-leading.
In his view, investors are underappreciating the trial’s strengths and overreacting to manageable side effects. Zelin reiterated his “buy” rating on VKTX stock today with a price objective of $125 indicating 450% potential upside from here.
Viking Therapeutics’ oral obesity pill remains commercially viable
Zelin highlighted Viking Therapeutics’ maintenance dose data as a key commercial differentiator on “The Exchange”.
Patients who tapered from 90mg to 30mg continued to lose weight at 13 weeks, a result he calls “very compelling.” This supports a scalable cost-of-goods model and strengthens the drug’s long-term commercial viability.
The BTIG analyst recommends buying the dip in Viking Therapeutics shares also because 99% of the gastrointestinal (GI) side effects were mild to moderate and resolved by week three, suggesting tolerability concerns may be overstated.
Viking Therapeutics shares may prove a superb long-term holding
While VKTX hasn’t finalized its Phase 3 dosing strategy, Zelin believes the company is unlikely to pursue the highest dose tested – mitigating dropout risk and improving real-word adherence.
In short, while Viking Therapeutics’ mid-stage clinical trial data for its obesity pill sparked concern – analysts like Justin Zelin see a misunderstood narrative.
According to him, the sell-off reflects short-term fears, not long-term fundamentals. Competitive efficacy, scalable dosing, and manageable side effects make Viking viable contender in oral obesity market.
For investors willing to look past headline risk, the current weakness in VKTX shares may offer an attractive entry point ahead of Phase 3 clarity.
Investors should also note that even the Street’s lowest price target on the biotech stock sits at $29 – indicating potential “upside” of nearly 20% from here.
The post Why Viking Therapeutics stock reaction to obesity pill data is wildly ‘overdone’ appeared first on Invezz
