Here’s Why Viking Therapeutics Rose as Much as 14.9% Today

What happened

Shares of development-stage biopharma Viking Therapeutics (NASDAQ: VKTX) jumped nearly 15% today because, well, that’s become the new normal for the stock lately. Investors have been quick to hand the company a higher market cap since late May following two positive events concerning a high-priority research area of its pipeline. There’s a catch, though: Both of those news items have been external developments, not involving the company directly.

Nonetheless, this week management wisely took advantage of a higher stock price to conduct a share offering that provided gross proceeds of $77.6 million. That’s nearly double the cash balance of $36.3 million reported by the pre-revenue biopharma at the end of March — and it’ll be sorely needed to advance clinical programs in a maturing pipeline.

As of 3:31 p.m. EDT, the stock had settled to a 8.1% gain.

Image source: Getty Images.

So what

The biopharma stock has gained 150% in the last month alone. Most of it has come since the end of May, when Madrigal Pharmaceuticals announced promising results for its midstage drug candidate MGL-3196 as a potential treatment for nonalcoholic steatohepatitis (NASH). Viking Therapeutics has a midstage drug candidate for NASH, named VK2809, that works through a similar mechanism, so investors didn’t waste time pushing the company’s value higher.

A similar thing happened this week. Galmed Pharmaceuticals stock rose 250% in a single day when it released midstage results for its NASH drug candidate. That lifted shares of both Madrigal Pharmaceuticals and Viking Therapeutics.

Now what

While experimental NASH treatments have been hot commodities recently (and even in recent years, leading to several sizable acquisitions), it’s important for investors to remember that larger trials still need to be conducted before these drugs can gain marketing approval from regulators.

In the case of Viking Therapeutics, it still hasn’t even completed its own phase 2 trials, but has piggybacked on the positive results of its peers. That will soon change, as the company expects to release top-line results from its midstage NASH trial sometime in the second half of 2018. Until then, investors will have to wait for the results to confirm that their optimism isn’t misplaced.

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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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