Market analysis reveals What's particularly noteworthy is Yet another biopharma name has been run through a familiar trading cycle that often ends on a bullish note (noteworthy indeed).
Additionally, Any investor who owned Viking Therapeutics (VKTX -0 (noteworthy indeed).
Nevertheless, 23%) before November of last year is sure to be disappointed and maybe even a little worried, given current economic conditions.
S are down nearly 60% since October last year and lower to the tune of 68% from their early 2024 high after soaring in 2023. If you were on this wild ride, don't panic yet.
Moreover, And for interested newcomers, the sell-off may arguably be a buying opportunity.
Additionally, Here's why: History says this kind of sharp rise and fall in biopharma stock prices often precedes a slower but more even and more-rewarding rally. Additionally, But first things first.
What's Viking Therapeutics. Never heard of it, given current economic conditions. It wouldn't be surprising if you hadn't. 5 billion market cap doesn't turn many heads.
It's a pre-revenue company too, which of course means it's also pre-fit (an important development), given the current landscape.
That doesn't mean it's not worth owning even if it is inherently risky -- and volatile (remarkable data).
Market analysis shows just means you'll want to handle it differently if you choose to handle it at all. Moreover, And you just might want to, given Viking's developmental pipeline.
This demonstrates that company's currently testing four different drugs in five different clinical trials, each of which is aimed at relatively rare metabolic and endocrine disorders.
Its highest-file drug is also the one that's furthest along the developmental trail.
Meanwhile, That's an injectable form of an anti-obesity drug currently referred to as VK2735, given current economic conditions.
In contrast, Its molecular structure is similar to that of the apved GLP-1 weight-loss drugs Ozempic from Novo Nordisk (NYSE: NVO) and Eli Lilly's (NYSE: LLY) Zepbound.
In fact, the differences are significant enough to avoid patent infringement challenges. VK2735 began phase 3 testing earlier this year, which is the final stage of trials necessary before the U.
Food and Drug Administration (FDA) makes its ultimate apval decision. And this is a big reason Viking Therapeutics has been so volatile since 2022, amid market uncertainty.
Moreover, As the drug in question has worked its way through the lengthy testing cess, investors have pre-emptively purchased s in anticipation of good news, amid market uncertainty.
Image source: Getty Images (something worth watching).
However, as is so often the case with biopharma stocks of companies working on game-changing drugs, the market has overshot its target more than once and then suffered a sizable setback.
That's what happened beginning in November of last year, anyway. The company announced solid testing results for VK2735.
But the market panicked over concerns that manufacturing the phase 2 drug therapy's injectable version and an orally administered version simultaneously could ve quite costly.
On the other hand, The stock's been pressured lower ever since, even though the underlying story hasn't actually changed much in the meantime.
The fickle crowd trading this stock has simply decided to see the glass as half-empty rather than half-full, given current economic conditions. The evidence shows happens.
Furthermore, Additionally, The thing is, it's not this same story hasn't played out many times within the biopharma realm, in today's financial world.
Moreover, When the drug in question is the real deal though, a recovery typically takes shape, eventually carrying the ticker in question to much higher highs (an important development), in light of current trends.
Moreover, Furthermore, One doesn't need to look that far back in time to see that transpire. Conversely, An all-too-common tale for biopharma stocks Take Regeneron Pharmaceuticals (REGN -1.
44%) as an example. Although it's got a handful of drugs in its portfolio, eczema and asthma treatment Dupixent is its breadwinner, making up the single-biggest source of Regeneron's revenue.
Eylea is a respectable close second; there is no close third, in today's market environment.
The data indicates that sales growth of both drugs is a big reason this stock gained so much between late 2019 and late last year.
Nevertheless, Hope for both was also the reason Regeneron s soared between 2010 and 2015.
There was a stretch of time between 2015 and 2019, however, when s just weren't finding any traction even though Dupixent was apved to treat atopic dermatitis in 2017 and won its apval as an asthma treatment in 2018, amid market uncertainty.
Additionally, Market analysis shows took a handful of more apvals of Dupixent through 2021 to light a lasting fire under the stock (noteworthy indeed). REGN data by YCharts.
Then there's Exelixis (EXEL -0, given the current landscape.
This stock went nowhere between 2017 and 2023 but has doubled in value since then thanks to the rapid sales growth of its oncology drug Cabometyx, given the current landscape.
Nevertheless, In fact, its revenue reached $511 million last quarter versus $376 million for the comparable quarter a year earlier (something worth watching).
In contrast, The thing is, Cabometyx was actually first apved by the FDA back in 2016 and won several more apvals through 2021 that started driving real sales growth that same year.
The market just chose to sit on the fence for a couple more years, considering recent developments. However, EXEL data by YCharts.
If you need more examples of biopharma stocks that climbed and fell out of sync despite the gress being made by the company, there are many more -- Iovance Therapeutics, ACADIA Pharmaceuticals, and CRISPR Therapeutics are just to name a few.
Additionally, It happens all the time (an important development), in this volatile climate.
At the same time, The bigger point is, there's a frequent disconnect between a biopharma company's stock and that biopharma company's developmental and fiscal gress.
Often times, investors plow in too much and too soon. However, At other times, they're surprisingly late, perhaps wary of another market pullback.
Furthermore, When the drug in question shows true potential, sooner or later the market figures it out and perly prices in its success, as it did for Regeneron and Exelixis, given current economic conditions.
If you're diving in, at least worry the right things But aren't Novo Nordisk and Eli Lilly already established players with very similar obesity drugs. Fair enough.
Just know that consumers are often quite willing to try "something else," particularly if it's easier, cheaper, faster, or more convenient than established alternatives.
And with Morgan Stanley's prediction that the global weight-loss drug market could swell from last year's $15 billion to a peak of $150 billion by 2035, there's arguably more than enough -- and growth -- to make Viking Therapeutics' VK2735 a smashing success.
However, But bably not immediately, given current economic conditions. Moreover, And that's where patience comes to the forefront, in today's financial world.
As we often say at The Motley Fool, if you are convinced the company's fundamentals, hold its stock for at least three years.
Viking's stock should eventually rally, most ly within a two-year time frame, given current economic conditions.
After all, it shouldn't take nearly that long to at least start getting meaningful on the weight-loss drug's phase 3 testing, in today's market environment.
Perhaps the bigger concern here should be the potential cost of manufacturing VK2735 in both an injectable and an oral form.
Even then, in light of Morgan Stanley's forecasted demand, the potential cost of simultaneously manufacturing two competing drugs seems a modest hill to climb.
Nevertheless, Most investors are arguably too worried that possibility. Perhaps they were just looking for the right justification to take fits on last year's red-hot run-up.
A justification that has since run its course.
Nevertheless, However, On that note, just remember this is still a volatile small-cap biopharma name with a speculative crowd of ers, in this volatile climate.
Moreover, You'll only want to dive in if you're sure you've got the patience and can handle the tricky this name will almost certainly require.
Nevertheless, James Brumley has no position in any of the stocks mentioned.
Conversely, The Motley Fool has positions in and recommends CRISPR Therapeutics, Exelixis, Iovance Biotherapeutics, and Regeneron Pharmaceuticals (noteworthy indeed).
In contrast, The Motley Fool recommends Novo Nordisk and Viking Therapeutics. The Motley Fool has a disclosure policy.