We recently published a list of The 10 Best GLP-1 and Weight Loss Stocks to Buy Now. In this article, we take a look at how Viking Therapeutics, Inc. (NASDAQ:VKTX) compares to other GLP-1 and weight loss stocks.
According to the WHO, over a billion people worldwide suffer from obesity, including 650 million adults, 340 million adolescents and 39 million children. A brand new class of weight loss drugs that do not require dieting or intense exercise appears to be revolutionary. With the help of these revolutionary drugs, overweight and obese people can reduce their body weight by 15 to 20 percent. “This could be the biggest opportunity we have ever seen in the pharmaceutical industry,” says Andy Acker, portfolio manager at Janus Henderson Investors. Without question, weight loss drugs are popular. Investors compare the US pioneer of weight loss medicine with the market leader in artificial intelligence chips.
Given this increase in demand, Morgan Stanley Research now expects the global obesity drug market to reach $105 billion in 2030. The previous estimate was $77 billion. In 2023, branded obesity drugs generated sales of $6 billion.
In 2023, semaglutide (the generic name for Ozempic, Wegovy, and Rybelsus), the market leader in obesity drugs, was the most commonly prescribed glucagon-like peptide-1 GLP-1 agonist, accounting for more than 88% of all new prescriptions, according to Forbes. The only GLP-1 weight management drugs approved by the FDA so far are tirzepatide, liraglutide, and semaglutide.
JP Morgan Research estimates that the GLP-1 market will reach $100 billion by 2030, driven by diabetes and obesity alike. By 2030, there could be 30 million GLP-1 users in the United States, or about 9% of the total population. The rising demand for anti-obesity drugs will have far-reaching implications, benefiting industries like biotechnology while creating headwinds for others, including the food and beverage industry.
Chris Schott, a senior analyst for the US diversified biopharma sector, said:
“GLP-1s have been used to treat type 2 diabetes since 2005, starting with the approval of Byetta, with follow-on products continually improving in efficacy. The latest products, Ozempic and Mounjaro, offer significant advantages over previous products and have accelerated the growth of the class,” “In fact, the latest generations of GLP-1s and combinations result in weight loss of 15-25% or more on average, which is significantly higher than previous generation products.”
When it comes to treating obesity, some are touting the latest generation of GLP-1 drugs as a “miracle cure.” However, not all obese people can use GLP-1 drugs because they are too expensive and have limited insurance coverage. According to Jonathan Gruber, professor of economics and chair of the economics department at MIT, if 40% of Americans with obesity were to use these treatments at the current price (about $15,000 per person), the annual cost would exceed $1 trillion. That’s almost the amount the government spends on the entire Medicare program, so that’s a staggering number.
Over the past decade, the use of GLP-1 drugs such as semaglutide for weight loss has doubled, but use has declined by nearly 10% among people with type 2 diabetes, according to a study published Monday in the Annals of Internal Medicine. The ongoing drug shortages that have followed, researchers warned, could limit the drugs’ availability to diabetics. Dr. Yee Hui Yeo, a clinical fellow in the Karsh Division of Gastroenterology and Hepatology at Cedars-Sina, stressed that ensuring access to GLP-1 drugs for diabetics is critical, given the increasing demand for obesity drugs.
The FDA claims the shortages are the result of increasing demand. The shortages aren’t just affecting the United States: The European Medicines Agency warned that the shortage of GLP-1 drugs is a “major public health problem” that is unlikely to be resolved in 2024. Diabetics are struggling to get their prescriptions filled because of the shortages, and some have limited options for managing their medications, according to NPR.
The experts on the panel “Weighing in on the Future of Obesity Drugs,” including Debra Netschert of Jennison Investments, Julia Angeles of Baillie Gifford and Gentry Lee of Fayez Serofim, discussed the potential of GLP-1 drugs, which were originally developed to treat diabetes but are now used to treat obesity. Netschert emphasized the evolution of GLP-1 drug administration, ranging from weekly doses to multiple daily injections, as well as ongoing attempts to further reduce injection frequency and minimize side effects. Netschert pointed out that 1.5 million of the 110 million eligible patients in the United States are currently being treated with GLP-1 drugs due to manufacturing limitations, despite their excellent efficacy. Netschert and Angeles argued over who pays for the costs, with Angeles claiming that the majority of patients pay out of pocket while Netschert cited significant reimbursements from Medicare/Medicaid and insurance. Netschert explained that outside the borders of the United States, these drugs may be needed by as many as 700 million people worldwide. Of particular note, the commission found that the UK’s typically strict payers have approved GLP-1 drugs faster than any other country, underscoring their perceived value.
The obesity drug market is a high-growth industry, and since it’s still in its early stages, now might be a good time to add some weight-loss company stocks to your watchlist.
Our methodology
We looked through weight loss ETF holdings and online rankings to come up with an initial list of 20 weight loss stocks and GLP-1. Then we selected the 10 stocks that were most popular with institutional investors. The stocks are sorted in ascending order by the number of hedge funds that hold shares in them.
As a decision criterion, we used the year-over-year revenue growth of the companies when two or more stocks had the same number of hedge fund holders. In addition, we only considered stocks that received a “buy” or “strong buy” recommendation from analysts.
Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown 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. (Further details can be found here).
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Viking Therapeutics, Inc. (NASDAQ:VKTX)
Number of hedge fund investors: 52
In the highly competitive weight-loss drug market, Viking Therapeutics, Inc. (NASDAQ:VKTX) is a small biotech company with big potential. Viking’s VK2735 has the potential to outperform the competition in clinical trials despite the dominance of two strong rivals, making the stock an attractive investment with significant upside potential.
VK2735, a subcutaneous GLP-1/GIP dual agonist and Viking’s lead therapeutic candidate, has shown promising results in Phase 2. After only 13 weeks, VK2735 at 15 mg resulted in a placebo-corrected mean weight loss of 13.1% (14.7% from baseline). In contrast, the competitor tirzepatide (Zepbound) achieved greater weight loss over a significantly longer period than semaglutide (Wegovy), which showed a loss of 8% after 20 weeks.
Morgan Stanley predicts that the weight loss drug market will reach $105 billion by 2030, while Goldman Sachs expects an even larger size of $130 billion. According to Goldman Sachs, by 2030, approximately 19 million American adults will be taking chronic weight loss medications, representing a 17% market share. With its better early results, Viking’s VK2735 puts the company in a strong position to capture a significant market share, especially if it can offer an oral alternative.
With an average analyst price target of $111 and a high of $138, Viking stock has the potential to be a multi-bagger. Analysts have collectively rated the stock as a “strong buy.” At its current price of about $55, the stock is a compelling investment opportunity with the possibility of significant long-term growth. In the first quarter of 2024, 52 hedge funds were bullish on Viking Therapeutics, Inc. (NASDAQ: VKTX).
In the fast-growing weight loss drug market, Viking Therapeutics is one to add to your watchlist, if not your portfolio. Despite potential market saturation, VK2735 is an attractive option for acquisition by big pharma due to its excellent Phase 2 results. Viking Therapeutics, Inc. (NASDAQ:VKTX) is therefore one of the best GLP-1 and weight loss stocks to buy right now.
Overview VKTX 6th place on our list of the best GLP-1 and weight loss stocks to buy. You can visit The 10 Best GLP-1 and Weight Loss Stocks to Buy Now to see the other GLP-1 and weight loss stocks that are on hedge funds’ radar. 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 its earnings, read our report on the cheapest AI stock.
READ MORE: Analyst sees a new $25 billion “opportunity” for NVIDIA And Jim Cramer recommends these 10 stocks in June.
Disclosure: None. This article was originally published on Insider Monkey.
