Eli Lilly (LLY) and Novo Nordisk (NVO) have become hot stocks over the past year thanks to their blockbuster GLP-1 drugs to treat obesity.
Over the last year, Lilly and Novo shares are up 72% and 44%, respectively. By market cap, Novo is the largest company in Europe while Lilly ranks eighth among US companies with a market cap of $900 billion.
Shares of both companies have been bolstered by promising research that shows expanded indications beyond losing weight and treating diabetes, sending investors on the hunt for the next big breakthrough in the space.
On a recent segment of Good Buy or Goodbye (video above), RSE Ventures CEO Matt Higgins made the case for Viking Therapeutics (VKTX).
“We all know what Eli Lilly and what [Novo Nordisk have] done,” Higgins, who is invested in $VKTX, told Yahoo Finance. “But it’s a massive TAM [total addressable market]. It’s a $150 billion market. And [Viking] is a biotechnology firm … and they are onto something pretty amazing. They are working on two products: One is a shot that you would take once a month, and the other is a pill, which is the holy grail and early studies show that it’s being very well tolerated.”
Higgins isn’t the only one who’s noticed. Viking’s shares are up nearly 250% this year. At a market cap of $7 billion, its size is dwarfed by Novo Nordisk and Eli Lilly.
Another big contrast with the pharma giants is that Viking doesn’t yet have any revenue because its treatments are still in development. And as of June, the company didn’t even have 30 full-time employees; combined, Novo and Lilly employ more than 100,000 people.
Even with the surge in Viking stock this year, Higgins thinks shares are still attractive, with two potential catalysts going forward.
One is the possibility of being acquired: He ballparks a takeout value at $15 billion, or roughly double today’s value.
The other is a conference in November, at which Viking is speculated to update its findings around its GLP-1s.
“I don’t think it’s priced in at all,” Higgins said.
Julie Hyman is the co-host of Market Domination on Yahoo Finance. You can find her on social media @juleshyman.
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