After Falling 68%, Where Will This Weight-Loss Drug Stock Be in 2 Years? History Shows Massive Gains Ahead.

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Anyone who held onto Viking Therapeutics (VKTX) prior to November of last year likely feels disappointed, if not a bit anxious. The shares have dropped by almost 60% since October last year and are currently down by 68% from their peak in early 2024, following a significant surge in 2023. Ouch!

If you find yourself on this rollercoaster, don’t fret just yet. For those intrigued by the unfolding events, this sudden drop might represent a potential chance to buy. Here’s the reasoning behind it: Historically, such dramatic increases and decreases in biopharmaceutical stock values often set the stage for a more gradual but sustained and potentially profitable uptrend.

But first things first.

What’s Viking Therapeutics?

If you haven’t come across it before, that’s quite understandable. With a market capitalization of only $3.5 billion, it isn’t exactly grabbing everyone’s attention yet. What’s more, this company hasn’t earned any revenue or profit so far, which is a common situation for companies in their early stages.

Owning something that’s inherently risky and volatile doesn’t make it any less valuable. However, because of its unpredictability, handling it requires a different approach should you decide to manage it.

And you just might want to, given Viking’s developmental pipeline.

This organization is conducting trials for four distinct drugs in five separate studies, each focusing on uncommon metabolic and endocrine conditions. The drug with the most attention is also the one closest to completion in its development process. This drug is an injectable version of a potential anti-obesity treatment known as VK2735 at present. Its molecular makeup bears resemblance to the GLP-1 weight-loss drugs Ozempic from Novo Nordisk (NYSE: NVO) and Zepbound, developed by Eli Lilly (NYSE: LLY).

Indeed, the variations are substantial enough to bypass potential legal disputes over patent violations. The trial for VK2735 entered its third phase this year, marking the last step in the testing process before the U.S. Food and Drug Administration (FDA) makes their final decision on approval.

Since 2022, Viking Therapeutics has experienced significant volatility due to one main factor: the anticipation among investors. They’ve been buying shares in advance, hoping for favorable results from the extensive testing process that the company’s drug is undergoing.

Similarly to how it frequently happens with biopharmaceutical stocks that focus on groundbreaking medications, the market has exceeded its objective multiple times and subsequently experienced a significant decline.

Starting from November of last year, that’s when things began to unfold. The company disclosed robust test outcomes for VK2735. However, the market became apprehensive due to worries about the financial implications of producing both the injectable and oral versions of the Phase 2 drug therapy concurrently, as it might turn out to be quite expensive.

Over time, the stock has continued to fall despite the fact that its fundamental story hasn’t altered significantly. This unstable group of investors dealing with the stock seems to focus on the potential losses rather than the potential gains, which is a common occurrence in trading.

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In the world of biopharmaceuticals, it often happens that a particular scenario repeats itself. However, when the drug at hand is genuinely groundbreaking, there’s usually a recovery phase, leading the associated stock to climb to significantly greater heights over time.

One doesn’t need to look that far back in time to see that transpire.

An all-too-common tale for biopharma stocks

Regeneron Pharmaceuticals (REGN) serves as an illustrative case. While it offers a variety of drugs, its main income earner is Dupixent, used for treating eczema and asthma. This drug accounts for the largest portion of Regeneron’s total revenue. Eylea follows closely in second place; there is no clear third contender. The continuous increase in sales for both drugs has been a significant factor contributing to the stock’s substantial growth from late 2019 until the end of last year. Additionally, the optimism surrounding both drugs was instrumental in causing Regeneron’s share price to surge between 2010 and 2015.

From 2015 to 2019, there was a period where shares didn’t gain much momentum, despite Dupixent being approved to treat atopic dermatitis in 2017 and gaining approval as an asthma treatment in 2018. It wasn’t until several more approvals of Dupixent were granted through 2021 that the stock finally started to significantly rise.

Additionally, consider the biopharmaceutical company Exelixis (EXEL). From 2017 until 2023, its stock didn’t show much progress, but since then, it has nearly doubled in value due to the robust sales growth of its oncology drug Cabometyx. To be precise, the company reported revenue of $511 million in the last quarter, which is a significant increase from $376 million during the same period the previous year.

It’s worth noting that Cabometyx was initially approved by the FDA as early as 2016 and continued to earn additional approvals until 2021. These approvals sparked the growth in actual sales beginning in 2016, although the market remained hesitant for a couple more years before witnessing this impressive expansion.

There are plenty of additional biopharma stocks, such as Iovance Therapeutics, ACADIA Pharmaceuticals, and CRISPR Therapeutics, that have moved independently of the company’s progress. This phenomenon is quite common.

The main idea is that there’s often a gap between a biopharmaceutical company’s stock value and its actual developmental and financial progress. Frequently, investors invest excessively and prematurely. In some cases, they may even be tardy, possibly cautious about another market downturn.

Eventually, when a drug demonstrates genuine promise, the market eventually recognizes its potential and adjusts its price to reflect its success, much like what happened with Regeneron and Exelixis.

If you’re diving in, at least worry about the right things

However, wouldn’t you agree that both Novo Nordisk and Eli Lilly are well-established companies with comparable obesity treatments in the market? That’s correct, isn’t it?

Consumers tend to be open to trying new options, especially when these alternatives are easier, cheaper, quicker, or more convenient than existing ones. Given Morgan Stanley’s forecast that the global weight-loss drug market could expand from its $15 billion value in 2021 to a possible $150 billion by 2035, there seems to be a substantial opportunity for growth and success for Viking Therapeutics’ VK2735. However, it might not achieve immediate success. In this situation, patience becomes essential. As we frequently advise at The CORP-DEPO, if you believe in the company’s business foundations, hold onto its stock for a minimum of three years.

It’s expected that Viking’s shares will rebound in the future, and this could happen within the next two years. Given that significant results from their phase 3 testing of the weight-loss drug should become available much sooner than that, it seems reasonable to anticipate some progress.

A more important issue might be the financial implications of producing VK2735 in both an injectable and oral version, given Morgan Stanley’s projected market demand. It appears that the challenge of concurrently manufacturing two rival drugs may not be as daunting as it initially seems for many investors. However, their apprehension about this scenario could simply be a search for a valid reason to cash out from last year’s steep price increase… a rationale that has since lost its momentum.

In summary, it’s important to be aware that this is a small biotech company with a stock market value that can fluctuate significantly. If you decide to invest, make certain you possess the required patience and are prepared for the potential challenges ahead, as this investment may demand careful maneuvering.

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2025-07-19 14:51