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Viking Therapeutics (NASDAQ: VKTX) currently has four phase 3 trials for its key drug, VK2735, in progress. Two of them are in the subcutaneous (injectable) form for obesity and obesity with type 2 diabetes, and two are in oral form for obesity and obesity with type 2 diabetes.
The key to the stock's future value lies in the oral phase 3 in obesity. Here's why, and a look at what the stock could be worth if all goes well.
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The subcutaneous trials are important for establishing market share in a fiercely competitive market against current and future blockbuster drugs from rivals like Eli Lilly (NYSE: LLY) and Novo Nordisk (NYSE: NVO).
In comparison, the oral trials are important for potentially expanding its addressable market by creating a viable dual-formulation strategy, whereby an initial subcutaneous dose (to induce rapid weight loss) can be combined with a more convenient oral maintenance dose. In addition, patients who don't like subcutaneous dosing could take oral VK2735 to lose weight, albeit probably at a slower rate than with subcutaneous dosing.
The subcutaneous VK2735 trials (Vanquish-1 and Vanquish-2) are already underway, with data expected from them in the second half of 2027. Meanwhile, the oral VK2735 trials (Sunrise-1 and Sunrise-2) only started in the current quarter, and given that they are 68-week trials, data from them are likely to be available in 2028.
As a reminder, Viking also has the second part of a small maintenance trial underway, which will examine an initial subcutaneous VK2735 dose over 21 weeks followed by an oral VK2735 dose over a following 12 weeks.
It's important not to underestimate the importance of this trial result, as the phase 2 oral VK2735 trial had some questionable tolerability data: 20% of treated patients discontinued due to an adverse event. Still, I think there's reason to expect better outcomes in the maintenance trial as well as the phase 3 trials.
The maintenance trial data is due in 2027, and Viking Therapeutics investors should have data from all the phase 3 trials by the end of 2028. Commercial success in clinical trials is not measured in binary fashion, meaning that VK2735's commercial appeal won't depend solely on a favorable result; it will depend on factors such as efficacy and tolerability relative to rivals. Still, based on the phase 2 results for VK2735, it's possible subcutaneous VK2735 could report steeper weight loss than its most similar drug, Eli Lilly's tirzepatide (Zepbound for obesity and Mounjaro for obesity with type 2 diabetes).
Turning to valuation matters, according to data analytics company Evaluate, peak tirzepatide sales could hit $70 billion by 2032.
If VK2735 could establish, say, 10% of those sales, its peak sales could be about $7 billion. However, the figure needs to be risk-adjusted for the uncertainty in the clinical trials. According to academic studies, the probability of success from phase 3 to approval ranges from 59% to 70%, with about 63% for a metabolic lead indication drug.
Conservatively assuming 50%, peak sales for VK2735 could be $3.5 billion; Viking trading at 3 to 5 times peak sales gives a market cap of $10.5 billion to $17.5 billion, with the midpoint ($14 billion) equivalent to a stock price of $110. That would mean a $10,000 investment now could be worth up to $47,800 in 2028.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly, Novo Nordisk, and Viking Therapeutics. The Motley Fool has a disclosure policy.
Prediction: $10,000 Invested in Viking Therapeutics Before Its Oral Phase 3 Readouts Could Be Worth This Much by 2028 was originally published by The Motley Fool
