Viking therapies (NASDAQ: VKTX) And Summit Therapeutics (NASDAQ: SMMT) They are both emerging biotech companies with no sales revenue, lots of money in the bank, big catalysts on the horizon and pipeline strategies that can put them in major markets relatively quickly.
That makes them more attractive than most biotech companies out there. It also makes it a bit complicated to decide which one is worth an investment of about $1,500. Let’s shed some light on this issue by analyzing both stocks and see which one can soar to higher heights in the long run.
The case for Viking
Viking is about to enter the home front in its attempt to develop a therapy to treat obesity. The lead candidate, VK2735, will soon initiate Phase 3 trials to test the injectable formulation, and will also soon initiate Phase 2 trials for the oral formulation. All the data the company has published so far indicates that its candidate is quite potent, but also quite tolerable for patients.
If any of these programs are approved for sale within the next few years, it will provide a nice return for anyone who buys the stock today.
Per Morgan Stanley Research shows that the anti-obesity drug market will grow to approximately $105 billion per year by 2030. Currently, the market is largely divided by incumbents. Eli Lilly And Novo Nordiskbut that will likely change in the coming years thanks to a host of biopharmaceutical companies like Viking scrambling to complete their clinical trials and get their candidates approved. It won’t take much of a share of that market to proportionately expand this biotechnology by a huge amount, as it currently returns zero.
But this biotech is not under any financial pressure. As of the second quarter, it had $942 million in cash, equivalents and short-term investments. In the same quarter, total operating expenses, including research and development (R&D) costs, were just over $34 million. So it’s safe to say it has enough cash to conduct the final phase of testing with VK2735 without having to dip into additional funding, which is bullish.
The bull thesis for Summit
Summit’s goal is to commercialize its two late-stage programs that treat certain subsets of non-small cell lung cancer (NSCLC). Both studies are testing a biological drug called ivonescimab, which is licensed from a Chinese biotech called Akesobio. That company is currently investigating ivonescimab in a total of 19 different clinical programs for NSCLC and a few other cancers, and could also one day be willing to license the rights for those other indications to Summit.
So even if Summit doesn’t have an R&D pipeline of its own creations, the company likely still has the ability to commercialize multiple programs that the collaborator developed in the high-risk early stages of the clinical trial process.
According to a report from Credence Research, the market for drugs to treat non-small cell lung cancer will reach annual sales of around $26 billion by 2032. Today, the market is only worth about $11.5 billion, spread across several types of treatments, each of which doctors can choose from multiple drugs. So Summit’s candidate should have an edge in effectiveness to find a niche in the market. Based on the clinical data to date, ivonescimab may indeed lead to better survival outcomes compared to standard care.
The first two licensed programs could hit the market within the next three or four years if all goes according to plan; one of them just received Fast Track designation from the Food and Drug Administration (FDA) and recruitment for the Phase 3 trial is now complete. Having just raised $235 million in gross proceeds from a group of biopharmaceutical and institutional investors, on top of the $326 million in cash, equivalents and short-term investments it reported in the second quarter, it has more than enough capital to reach its maximum to achieve returns. to bring advanced programs to market, provided that the clinical trials produce the desired results.
Go with the smaller company chasing the bigger market
Between Viking Therapeutics and Summit Therapeutics, investing $1,500 in Viking makes more sense at this point, although it is a bit riskier since it doesn’t have a collaboration partner like Akesobio to pave the way with early and mid-stage clinical trials.
If it can commercialize an anti-obesity drug that gives it even a 10% share of the market, the money will flow in, simply due to the sheer size of the weight loss drug market. And because it conducts its R&D in-house, it can credibly pursue further development of its commercialized candidates to refine them and squeeze even more money out of them later.
While Summit would also be a winning investment if it were successful in commercializing ivonescimab for a few different indications within NSCLC, the total addressable market size is much smaller, so a proportionately larger market share would be required to achieve an equivalent amount to be able to grow at Viking. . And the market for NSCLC interventions is already quite crowded, so achieving greater share would be difficult. Finally, the company could struggle to build on its successes if it can bring a drug to market, as it will still be dependent on Akesobio’s pipeline strategy for licensing opportunities if it continues with its current approach.
Should you invest $1,000 in Viking Therapeutics now?
Consider the following before purchasing shares in Viking Therapeutics:
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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Summit Therapeutics. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
Better Biotech Stocks to Buy Now at $1,500: Viking Therapeutics vs. Summit Therapeutics was originally published by The Motley Fool
