Viking Therapeutics (VKTX) Gains Bigger Vote of Confidence from H.C. Wainwright

Following encouraging NASH data from VKTX's biotech peer Madrigal, H.C.


In a biotech bullish frenzy, Wall Street has been taken by storm ever since impressive 36-week Phase 2 data for Madrigal’s NASH asset MGL-3196 was released. What does this mean for Viking Therapeutics Inc (NASDAQ:VKTX)? Consider that the stock roared like wildfire up 69% yesterday and continues to flicker up another 4% today, as the Madrigal data bodes positively for Viking’s VK2809.

For context, Madrigal’s posted NASH data reveals statistically significant improvements in 1) reaching a two point or more reduction in NAS on biopsy, which is an NSFLD activity score 2) NASH resolution and 3) MRIPDFF fat reductions at week 12 predicted better NASSH histologic responses at week 36.H.C. Wainwright analyst Joseph Pantginis sizes up yesterday’s data read-out as “a big win,” validating the “thyroid receptor β approach,” and derisking Viking’s Phase 2 outcome for its asset in the process.

In reaction, the analyst reiterates a Buy rating on VKTX stock while lifting the price target from $11 to $15, which implies a 44% upside from current levels. (To watch Pantginis’ track record, click here)

“Beyond the clinical data, they provided major validation for the thyroid receptor β (TRβ) agonist approach for the treatment of NAFLD and NASH, which we believe positively reads through for Viking’s VK2809 using the identical approach. VK2809 is currently in a Phase 2 study in patients with NSFLD and elevated LDL cholesterol, and data are expected in 2H18, which we see as a potentially significant driver for the shares. Further we believe that the Madrigal results further derisk the outcome of the VK2809 study. Importantly, beyond the primary endpoint of change in LDL-C, we project encouraging data from the exploratory endpoint of change in liver fat (MRI). We base our opinion on Viking taking the same approach as well as having supportive Phase 1 data in hand […] VK2809 has the potential to be best-in-class based on differentiated chemistry and liver selectivity, which potentially minimizes the risk for systemic side effects,” asserts Pantginis, who takes the NASH data as VK2809 winning over “deserved visibility,” reflected in yesterday’s killer share rally in the market.

In fact, the analyst sees an asset merely in the beginning legs of its foundational valuation story; in other words, VK2809 shines as an investment that is only now realizing more potential left to be unlocked. Though Viking’s program is “immature” against clinical data competition, its preclinical profile stands thorough and robust. Watch out for “strong clinical validation” from Viking’s NASH asset as soon as data is posted later in 2018.

Keep in mind, the analyst notes, the drug before was not deemed this biotech player’s lead value driver, a factor he is now factoring into his modeling of VKTX prospects. The more mature lead drug is VK5211, which could be a prospective first-in as well as best-in-class selective androgen receptor modulator. Looking ahead, Pantginis predicts the biotech firm has odds to secure a “lucrative partnership” thanks to VK5211’s opportunity.

TipRanks points to the bulls winning out on Wall Street when sizing up sentiment on VKTX stock. All 4 analysts polled in the last 3 months rate a Buy on VKTX stock. With a solid return potential of nearly 22%, the stock’s consensus target price stands at $12.17.

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