We came across a bullish thesis on Viking Therapeutics, Inc. (VKTX) on Substack by Kontra Investments. In this article, we will summarize the bulls’ thesis on VKTX. Viking Therapeutics, Inc. (VKTX)'s share was trading at $28.32 as of Feb 25^th.

The obesity treatment market is undergoing a seismic shift, with demand for effective weight-loss solutions surging to unprecedented levels. Once viewed primarily as a lifestyle issue, obesity is now recognized as a global health crisis, affecting over 1 billion people worldwide. The economic burden is staggering, with obesity-related healthcare costs and lost productivity estimated at $2 trillion annually, or 2.8% of global GDP. In the U.S., obesity rates have skyrocketed from 30.5% in 1999-2000 to 42.4% in 2017-2018, leading to a rise in obesity-related conditions such as diabetes, cardiovascular disease, and certain cancers. This has fueled a wave of investment in pharmaceutical innovation, as companies race to develop next-generation treatments that offer greater efficacy, fewer side effects, and more convenient dosing options. The market, which is expected to exceed $100 billion annually, is currently dominated by Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound, both of which have set new benchmarks for weight-loss efficacy. However, the space remains highly competitive, and emerging players like Viking Therapeutics are positioning themselves to disrupt the industry with innovative approaches.

Viking Therapeutics is quickly gaining recognition as a major contender in the obesity drug race, thanks to its promising candidate, VK2735. This dual GLP-1/GIP receptor agonist is designed to maximize weight loss while minimizing side effects, a critical differentiator in a market where tolerability issues have plagued many treatments. Early clinical data has been highly encouraging, with phase 2 results showing up to 15% weight loss in just 13 weeks—putting VK2735 in direct competition with the most effective obesity drugs currently available. What sets it apart is its superior safety profile, with trial participants reporting mostly mild side effects and significantly fewer severe gastrointestinal issues compared to existing treatments. This could prove to be a significant competitive advantage, as patients often discontinue other GLP-1 drugs due to intolerability.

Another key differentiator for Viking is its strategy to develop both subcutaneous and oral formulations of VK2735. While injectable GLP-1 therapies have proven highly effective, patient preference strongly favors oral treatments due to convenience and ease of use. If Viking can successfully bring an effective oral version of VK2735 to market, it could capture a sizable share of the obesity treatment space and drive mass adoption. The potential is enormous, but challenges remain—regulatory approval, market acceptance, and competition from established pharmaceutical giants are all hurdles Viking must overcome. Additionally, the company has historically struggled to advance its drug candidates into phase 3 trials, making execution a key risk factor for investors.

Despite these challenges, Viking is generating considerable excitement among both investors and the broader healthcare community. Social media discussions, particularly on platforms like X, indicate growing anticipation for VK2735’s next development milestones. With obesity rates continuing to climb and demand for effective treatments at an all-time high, Viking Therapeutics is in a strong position to capitalize on this multi-billion-dollar opportunity.

Viking Therapeutics, Inc. (VKTX) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held VKTX at the end of the third quarter which was 41 in the previous quarter. While we acknowledge the risk and potential of VKTX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VKTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.