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Ken Griffin started the Citadel hedge fund in 1990. It's become so successful that his net worth has risen to a stunning $46 billion.
In the third quarter, Griffin and Citadel more than tripled its stake in Viking Therapeutics (NASDAQ: VKTX). Griffin isn't the only one enthusiastic about this clinical-stage drugmaker. Wall Street analysts are sticking their necks out and predicting big gains around the corner.
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Recently, B. Riley analyst Mayank Mamtani initiated coverage of Viking Therapeutics with a buy rating. He gave the stock a $109 price target that implies a gain of about 105% from recent prices.
The anti-obesity goldrush and Viking Therapeutics
It's hard to overstate the level of demand out there for drugs that reduce appetites and blood sugar by activating glucagon-like peptide-1 (GLP-1) receptors. Sales of semaglutide, which Novo Nordisk markets as Wegovy for weight loss and as Ozempic for diabetes, reached $19.7 billion during the first nine months of 2024.
Semaglutide has been on the market since 2018, and it could soon be overtaken by Eli Lilly's (NYSE: LLY) tirzepatide. This is a next-generation treatment first approved in 2022. Marketed as Mounjaro for diabetes and as Zepbound for obesity, tirzepatide acts on GLP-1 and GIP receptors. Clinical trial results suggest the dual mode of action makes it more effective, and sales are shooting through the roof.
Eli Lilly reported total tirzepatide sales that rocketed 272% year over year to $11 billion during the first nine months of 2024. Billionaire investors like Griffin are piling into Viking Therapeutics because it's developing a dual GLP-1/GIP receptor agonist, tentatively named VK2735, that could become even more successful than tirzepatide.
Why Wall Street's so bullish for Viking Therapeutics
In the phase 2 Venture trial, treatment with injectible VK2735 helped patients lose a placebo-adjusted 13.1% of their weight after just 13 weeks of treatment. In one of two studies underpinning Zepbound's approval, Lilly's drug produced a placebo-adjusted 17.8% weight loss after 72 weeks of treatment. In the second trial, though, placebo-adjusted weight loss was just 11.6% or lower than the result VK2735 produced in a fraction of the time.
Sales of injectible GLP-1 drugs for weight management are soaring, and oral versions could be even more popular. Encouraging early data for an oral formulation of VK2735 is a big reason Wall Street analysts are pounding the table on Viking Therapeutics. In a phase 1 trial with oral VK2735, treatment with the highest dosage tested led to a 6.8% placebo-adjusted weight reduction after 28 days of dosing.