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Moves of Sympathy…
On the final day of May, Viking Therapeutics’s (VKTX) stock increased by 100% in a single session. Investors were quick to point out, though, that the move was just “in sympathy” to another company. Madrigal Pharmaceuticals (MDGL) had released important biopsy/histological data from a 36-week assessment of patients dosed with MGL-3196 as part of a Phase II trial for the compound; and Viking shareholders were happy to just go along for the ride, piggy-backing off of the results.
Yes, indeed. Viking hadn’t even needed to say a word that day in order to see a doubling in its share price! There is a natural inclination to view this type of move as “too fast, too soon.” That sentiment makes sense on the surface, and I wouldn’t fault anyone for assuming the stock must come back to earth.
But it is not for nothing that the move occurred. It was no accident.
Shares of Viking traded materially higher based on a very specific rationale – that the data which Madrigal had just released was in a word, phenomenal. The results provide significant validation to the THR-ß agonist class as a key mechanism of action in the potential treatment of NASH. That is BIG news; and in fact, Madrigal’s own shares were higher by some 200% in the past week, prior to placing a secondary offering at $305/share.
So, the move “in sympathy” makes a lot more sense when put into context of investors’ recognition that Viking’s second lead molecular candidate, VK2809, works in much the same way as MGL-3196. Both share the same mechanism of action in targeting NASH.
This is why in a lengthy write-up published late last year and titled, Welcome To The Glorious House of Gains, I had described VK2809 as follows:
VK2809 for example is the molecule most investors are probably most focused on. The drug has shown some extremely promising results in vivo for statistically significant reductions in expression of multiple genes associated with non-alcoholic steatohepatitis (NASH) [and] to the extent it can demonstrate similar effect in humans […] it could prove extremely valuable, particularly given how “hot” an area NASH has become from an investment perspective over the past 1-2 years.
So, before being quick to dismiss – perhaps it is better to understand…
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Bumbershoot Holdings L.P. 