On a day like today, when the entire stock market is under pressure, you must have done something right to see your stock jump more than 15%. What is magnetizing investors to invest in Viking Therapeutics Inc (NASDAQ:VKTX) today? The pricing of a public offering- as Viking ties up an equity financing, it is pricing its public offering of common stock to bring $55 million to its table.
Maxim analyst Jason McCarthy sees the raise as a “positive” for the company, finding the terms “favorable.”
To put it bluntly, the analyst asserts: “The rule in biotechnology is take capital when you can get it, especially when the terms are good.”
In reaction, McCarthy reiterates a Buy rating on VKTX stock with an $8 price target, which implies a close to 30% upside from current levels. (To watch McCarthy’s track record, click here)
Taking under account the roughly $15 million already raised just two months ago, McCarthy wagers Viking has $72 million of cash on its current balance sheet. This should offer a runway through the next two years for Viking, taking under account the analyst’s calculation of $23 to 25 million annually in operating expenses. Additionally, the company boasts a $16 million stock purchase deal with an institution investor.
McCarthy boils down the following catalysts offering Viking funding into three key drivers: “1. VK5211 is expected to move into a pivotal program in hip fracture, which we expect could initiate in mid-2018. 2. VK2809- P2 data (N=80) in non-alcoholic fatty liver disease (NAFLD) and hypercholesterolemia is expected in 1H18. 3. Pipeline- VK2809 is expected to move into the clinic for glycogen storage disease type Ia (GSD1a). VK0214 is continuing to move closer to the clinic for X-linked Adrenoleukodystrophy.”
Ultimately, “With runway into 2020, Viking is positioned to reach multiple catalysts. We also point out that with over $70M in cash, the company now has the ability to develop VK5211 through the planned pivotal program themselves. As a result, we see Viking in a stronger position to negotiate a partnership deal with an eye towards commercialization (versus being dependent on a partner to drive the clinical program),” surmises the analyst, looking ahead with anticipation to hip fracture and NASH data.
Read more: This Biotech Stock Portfolio Has Tripled the IBB Since Inception »
TipRanks showcases strong initial bullish word surrounding this biotech player. All 3 analysts polled in the last 3 months are bullish on Viking stock. With a return potential of 11%, the stock’s consensus target price stands at $6.83.