We recently published a list of The 7 Best Diabetes Stocks to Buy Now. In this article, we take a look at how Viking Therapeutics, Inc. (NASDAQ:VKTX) compares to other diabetes stocks.
According to the WHO, approximately 422 million people worldwide suffer from diabetes, with the majority living in low- and middle-income countries. Diabetes is directly responsible for an average of 1.5 million deaths per year. In recent decades, both the number of cases and the prevalence of diabetes have been steadily increasing. On the other hand, the International Diabetes Federation estimates that there are approximately 500 million diabetics worldwide, and this number is expected to increase by 25% by 2030 and 51% by 2045.
A special medical device called the continuous glucose monitor (CGM) is used to treat type 1 and type 2 diabetes. The market has grown significantly in recent years and has become a fast-growing area of diabetes care devices. The market for advanced diabetes care products – insulin pumps, pens and continuous glucose monitoring (CGM) devices – was estimated to be worth $21.8 billion in 2023, according to GlobalData. GlobalData forecasts expect the market to reach $33.4 billion by 2030, growing at a CAGR of 6.34% during the forecast period.
According to GlobalData’s database of marketed products, the CGM category currently includes 97 products. The vast majority of these devices are traditional CGMs, with only a few implantable sensors. According to GlobalData’s database of pipeline products, 133 products are either in development or approved. The numbers show that this market segment is growing rapidly and is a hub for innovative new technologies such as implantable CGMs.
Today, CGM technology also integrates AI. For example, Roche recently introduced a new AI-powered predictive CGM technology (Accu-Chek SmartGuide). At the launch, Chief Medical Officer Julien Boisdron of Roche Diabetes Care called it “a solution that is more than a CGM.” He described how the solution, which consists of two programs and a sensor, helps with both data visualization and prediction.
A new era of possibilities has dawned in the treatment of diabetes and its associated complications. These novel techniques offer significant opportunities to treat the combined problems associated with diabetes and obesity. A class of drugs called glucagon-like peptide-1 (GLP-1) agonists is used to treat obesity and type 2 diabetes mellitus (T2DM). As mentioned in our article, “The 10 Best GLP-1 and Weight Loss Stocks to Buy Now“By 2030, the GLP-1 market, driven equally by obesity and diabetes, is expected to reach $100 billion. 30 million GLP-1 users, or about 9% of the U.S. population, could be taking the drug by 2030.
The latest KFF Health Tracking survey shows that 12% of American adults report taking a GLP-1 drug at some point. Over the past half-decade, patients with diabetes account for 43% of GLP-1 prescriptions, while 22% of patients with obesity or overweight diagnoses also take the drug. The proportion of adults who have heard “a little” or “a lot” about these drugs has increased from 70% to 82% in the past year, while the proportion who have heard “a lot” or “a great deal” about them has increased from 19% to 32%.
However, there are now difficulties due to increased demand for these diabetes and weight loss drugs. The National Pharmacy Association (NPA) pointed to a possible “explosion of unlicensed drug sales on the Internet.” Semaglutide under the brand name Ozempic helps people with type 2 diabetes control their blood sugar levels, but in some countries, such as in the US under the brand name Wegovy, they are also widely used to help patients lose weight.
NPA Chairman Nick Kaye said:
“Pharmacists remain deeply concerned that the current drug shortages could lead to an explosion in unlicensed drug sales online.”
Methodology:
We looked through ETF holdings related to the diabetes industry and financial media to create an initial list of 20 diabetes stocks. Then we selected the 7 stocks with the highest upside potential and a market cap of over $2 billion. The stocks are sorted in ascending order of their upside potential.
Why do we care about the stocks hedge funds invest in? The reason is simple: Our research shows that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (See more details here)
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Viking Therapeutics, Inc. (NASDAQ:VKTX)
Price potential according to analysts: 98.90%
Following news that experimental weight-loss injection VK2735 will move into advanced testing sooner than expected, Viking Therapeutics, Inc. (NASDAQ:VKTX) saw its stock price rise 28% on July 25. The San Diego-based biotechnology company has reached a notable milestone, moving closer to the lucrative GLP-1 market, which analysts predict will reach $150 billion by the end of the decade.
Following encouraging results from a Phase 2 trial in February, Viking initially intended to conduct another mid-stage experiment. In a surprise move, CEO Brian Lian announced in the recent earnings call that the company would skip that step and go straight to a Phase 3 trial, citing positive feedback from the FDA. This decision could shorten the development timeline for VK2735 by a year, and analysts are now forecasting a potential launch in 2029.
The rapid development of Viking Therapeutics, Inc. (NASDAQ:VKTX) has put the company up against two major players, including Eli Lilly and Novo Nordisk, whose GLP-1-based diabetes and weight-loss drugs have taken over the market in the past two years. Eli Lilly’s shares fell more than 4% immediately after the Phase 3 trial announcement, and Novo Nordisk’s share price fell about 3%.
In trials, VK2735 has shown encouraging results, with patients losing up to 14.7% of their body weight in just 13 weeks. In addition, Viking intends to try a monthly dosing schedule, which would be a more convenient option than the current weekly treatments. The company is also working on an oral version of VK2735, which showed a 3.3% weight reduction in early trials. Viking has a significant year ahead as it prepares for a fourth-quarter meeting with the FDA.
However, Baron Health Care Fund stated the following about Viking Therapeutics, Inc. (NASDAQ:VKTX) in its second quarter 2024 investor letter:
“Another source of weakness in the subsector was Viking Therapeutics, Inc. (NASDAQ:VKTX), whose shares declined after rising nearly 300% in the previous quarter. Viking develops drugs for metabolic diseases with a focus on diabetes/obesity and MASH (metabolic steatohepatitis, i.e. fatty liver disease). The company’s lead product is VK2735, an injectable and oral version of a combined GLP-1/GIP weight-loss drug that competes directly with Lilly’s Mounjaro/Zepbound. Both of Viking’s lead products appear to be more effective than their competitors in two end markets with exceptionally large sales. Viking’s stock was hurt by biotech specialists focusing on an alternative mechanism for treating obesity called amylin inhibition and not viewing the company as an attractive takeover target (a view with which we disagree). The recent rebalancing of the popular SPDR S&P Biotech ETF (XBI) also put pressure on Viking’s share price as many long/short strategies had to rebalance their positions through forced selling.”
Still, it is currently the best diabetes stock to buy, as nine analysts have collectively rated the stock a “strong buy.” The average price target of $111.78 suggests a potential gain of 98.90% from the current share price of $56.20.
Overview VKTX 1st place on our list of the best diabetes stocks to buy. While we recognize VKTX’s potential as an investment, we believe some AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than VKTX but trades at less than 5x earnings, read our report on the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.
