Billionaire Bet: A Clinical-Stage Drugmaker with Blockbuster Potential
Ken Griffin’s Citadel hedge fund, boasting a staggering $46 billion net worth, has made a significant move in the third quarter. Griffin and Citadel have more than tripled their stake in Viking Therapeutics (NASDAQ: VKTX), a clinical-stage drugmaker. This bold move is not isolated, as Wall Street analysts are also bullish on the company’s prospects.
A Growing Demand for GLP-1 Receptor Activators
The market is hungry for drugs that reduce appetite and blood sugar by activating glucagon-like peptide-1 (GLP-1) receptors. Sales of semaglutide, marketed as Wegovy for weight loss and Ozempic for diabetes, have reached $19.7 billion in the first nine months of 2024. Eli Lilly’s tirzepatide, a next-generation treatment, is gaining traction, with sales rocketing 272% year over year to $11 billion during the same period.
Viking Therapeutics: A Potential Game-Changer
Viking Therapeutics is developing a dual GLP-1/GIP receptor agonist, VK2735, which could surpass tirzepatide’s success. In the phase 2 Venture trial, patients treated with injectable VK2735 lost a placebo-adjusted 13.1% of their weight after just 13 weeks. Additionally, encouraging early data for an oral formulation of VK2735 has Wall Street analysts excited.
A Promising Pipeline
Beyond VK2735, Viking Therapeutics has an experimental treatment for metabolic dysfunction-associated steatohepatitis (MASH) ready for phase 3 testing. This debilitating condition affects approximately 22 million Americans, and the FDA-approved Rezdiffra from Madrigal Pharmaceuticals has already generated annualized sales of $250 million.
Caution: High Expectations, Uncertain Timeline
While Viking Therapeutics’ pipeline is promising, it’s essential to remember that phase 3 trials have yet to begin, and FDA approval is far from guaranteed. Even if successful, it will be at least a couple of years before the company generates recurring revenue from commercial-stage products.
Invest with Caution
Billionaire Ken Griffin’s risk tolerance is likely higher than most investors. Before investing in Viking Therapeutics, consider alternative opportunities with more certain timelines. The Motley Fool’s Stock Advisor team has identified 10 stocks with monster return potential. Explore these options and create a well-diversified portfolio.
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