Eli Lilly (LLY) and Novo Nordisk (NVO) have become hot stocks in the past year thanks to their blockbuster GLP-1 drugs to treat obesity.
Over the past year, shares of Lilly and Novo are up 72% and 44%, respectively. Measured by market capitalization, Novo is the largest company in Europe, while Lilly ranks eighth among U.S. companies with a market capitalization of $900 billion.
Shares of both companies have been boosted by promising research showing expanded indications beyond weight loss and treating diabetes, leaving investors on the hunt for the next big breakthrough in the space.
In 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 is and what [Novo Nordisk have] done,” Higgins, who invested in $VKTX, told Yahoo Finance. “But it’s a huge TAM [total addressable market]. It’s a $150 billion market. And [Viking] is a biotechnology company… and they’re doing something pretty amazing. They are working on two products: one is an injection that you take once a month, and the other is a pill, which is the holy grail and early studies show it is very well tolerated.”
Higgins isn’t the only one who has noticed. Viking shares are up nearly 250% this year. With a market capitalization of $7 billion, its size is dwarfed by that of Novo Nordisk and Eli Lilly.
Another major contrast with the pharmaceutical giants is that Viking has no income yet because its treatments are still in development. And in June, the company didn’t even have 30 full-time employees; Together, Novo and Lilly employ more than 100,000 people.
Even with the rise 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 estimates a takeout value of $15 billion, or roughly double its current value.
The other is a conference in November, at which there is speculation that Viking will 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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