Is Viking Therapeutics A High-Risk High-Reward Biotech Play?

August 20th, 2025 by Trefis Team
VKTX: Viking Therapeutics logo
VKTX
Viking Therapeutics

Viking Therapeutics (NASDAQ: VKTX) plunged 42% on August 19, 2025, after Phase 2 results for its experimental obesity pill VK2735 underwhelmed investors. The oral formulation showed patients lost up to 12.2% of body weight after three months, comparing poorly to late-stage treatments from Eli Lilly and Novo Nordisk. Additionally, 28% of patients discontinued treatment due to side effects including nausea and vomiting. However, we think the fall in stock price seems a bit stretched. We will delve into it in the sections below. But, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P midcap indexes—and has achieved returns exceeding 91% since its inception. Also, see – GE Stock To $500?

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Pipeline Beyond VK2735: Multiple Shots on Goal

Despite the setback, Viking maintains several promising candidates that the market selloff has overlooked:

  • VK2735 Subcutaneous Formulation: Phase 3 trials (VANQUISH-1 and VANQUISH-2) initiated in June 2025. Previous Phase 2 results showed up to 13.1% placebo-adjusted weight loss, suggesting the injectable route remains viable despite oral formulation issues.
  • VK2809 for NASH/MASH: A thyroid hormone receptor β-selective agonist addressing the significant unmet need in non-alcoholic steatohepatitis treatment, with Phase 2b VOYAGE trial successfully completed.
  • Other Assets: VK5211 for hip fracture recovery, VK0612 for type 2 diabetes, and VK0214 for X-linked adrenoleukodystrophy provide additional pipeline diversification.

Valuation Disconnect

At $24 versus the $89 analyst average price target, Viking trades at a substantial discount. While some analysts will revise targets downward, the magnitude of correction appears excessive for the recent setback at a company with no commercial revenue and entirely pipeline-dependent valuation.

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Now, of course, we could be wrong in our assessment, especially if investors were primarily banking on the obesity pill as the key growth driver, in which case the stock could continue sliding despite pipeline diversification.

The Verdict

  • Key Risks: Further clinical disappointments, significant capital requirements for Phase 3 trials, and intense competition in metabolic disorders.
  • Opportunity: For risk-tolerant long-term investors, the current valuation appears to overly penalize a slightly diversified pipeline company for one program’s shortcomings.
  • Conclusion: Viking presents a compelling speculative opportunity for investors comfortable with biotech risk. The pipeline diversification across metabolic disorders, combined with the valuation dislocation, offers potential for significant long-term gains if clinical execution improves across other programs.

Surely, there always remains a meaningful risk when investing in a single, or just a handful, of stocks. Consider the Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

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