Stock Market Surprise: Viking Therapeutics Impresses Investors

The biotechnology company Viking Therapeutics caused a stir on the stock exchange floor on Thursday. The company's latest earnings release brought positive news that was well received by investors: The stock price rose by more than 21%, outperforming the S&P 500 index, which only gained 0.2%. Currently, Viking is in the clinical phase and does not yet generate revenue. However, in the third quarter, the company succeeded in reducing its net loss, which stood at just over $21 million ($0.22 per share), compared to over $22 million in the same quarter of 2023. According to estimates by Zack's, analysts had expected a loss of $0.24 per share. The stock gains are not solely due to a narrowly avoided breakeven point. Viking also reported a strong liquidity position, as it closed the quarter with $930 million in cash and short-term investments—significantly more than the $362 million at the end of 2023. For biotechnology companies in the clinical phase, these funds are crucial as they do not generate revenue. Viking’s operating expenses in the third quarter amounted to just over $36.5 million, providing the company with considerable financial flexibility. Particular attention is currently drawn to the VK2735 GLP-1 weight loss drug and its successful Phase 1 and Phase 2 studies. If the Phase 3 study also yields positive feedback, approval by the U.S. Food and Drug Administration (FDA) could be imminent, making the drug one of the few approved options in a young and popular market. Nevertheless, The Motley Fool Stock Advisor analyst team advises caution: Viking Therapeutics is not among the top candidates for current investments. A list of the top 10 stocks in 2005 also included Nvidia, a recommendation that would have led to substantial returns with a $1,000 investment at the time.