Viking Therapeutics(NASDAQ: VKTX) was an outlier on the stock exchange Thursday, in the best way possible. Within its latest earnings release, the biotech had some encouraging news to report, and investors rewarded the company by sending its share price up by more than 21%. With that giant gain, the stock absolutely crushed the S&P 500 index, which only inched up by 0.2%.
Third-quarter results published
For now, Viking is a clinical-stage biotech and doesn't generate any revenue. During its third quarter, it managed to trim its net loss. However, this came in at just over $21 million ($0.22 per share), against more than $22 million in the same period of 2023. According to estimates compiled by Zack's, analysts had collectively been expecting a per-share deficit of $0.24.
A narrow bottom-line beat is rarely the only reason for a stock's surge. Viking also provided an update on its cash position, revealing that it exited the quarter with $930 million in cash, equivalents, and short-term investments. That was well higher than the $362 million it held at the end of 2023.
For clinical-stage biotechs, these assets are critical, due to the lack of revenue. Viking's third-quarter operating expenses totaled slightly over $36.5 million, so it has quite a long runway ahead.
One of the hotter biotechs on the scene
This is particularly encouraging because, for many investors, Viking is the hot clinical-stage play these days. The company's VK2735 GLP-1 weight-loss drug has done quite well in its phase 1 and phase 2 trials, and if it repeats the feat in phase 3, it stands an excellent chance of winning U.S. Food and Drug Administration (FDA) approval.
It would then immediately become one of only a few approved drugs in this still-young-but-very-hot market. This alone makes Viking quite the compelling stock at the moment.
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Eric Volkman 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.
