Both competitors have promising lead programs, and enough cash, too.
Altimmune (ALT -7.47%) and Viking Therapeutics (VKTX -14.05%) are a pair of biotechs planning to follow in the footsteps of Novo Nordisk and Eli Lilly and develop GLP-1-targeted medicines for obesity like Wegovy and Zepbound. Both companies have a plausible pathway to continue making their investors wealthier, perhaps by quite a bit.
But which one is a better stock to buy right now? Join me in analyzing each, and we'll figure it out together.
The case in favor of Viking Therapeutics
Viking Therapeutics has a lead candidate, VK2735, that has already reported some great data from its phase 2b clinical trial. And there might be more good news on the way.
Long story short, the data suggest that its molecule could lead to significantly faster weight loss than the medicines currently being sold by Eli Lilly as well as Novo Nordisk, and with a comparable side effect profile. Study participants lost, on a placebo-adjusted basis, an average of 13.1% of their weight after just 13 weeks of treatment.
Additionally, there does not appear to be a plateau effect after which continuing treatment does not lead to more weight loss. So it has a pair of distinct edges that could allow it to capture market share from the incumbents even though they have a head start on the market.
Excitingly, the business also has an earlier-stage program that's essentially VK2735 formulated as a pill rather than an injection. The early data from that program look to be in line with the performance of the injected format. In the long run, the convenience of a daily pill rather than a weekly injection is hard to overstate, and if the program continues to perform well, it could thus access a larger portion of the market than the lead candidate, not to mention one-upping Wegovy and Zepbound, which are injections.
Finally, Viking is unusually well capitalized for a biotech, with $963 million in cash, short-term investments, and cash equivalents on hand in comparison to trailing-12-month (TTM) total expenses of $114 million. It has no debt, and it's unlikely that it will need to raise more cash to get VK2735 commercialized, assuming the late-stage clinical trials go as planned and regulators assent to commercialization afterward.
The cash cushion is also likely sufficient for it to recover after a clinical trial mishap by funding additional trials, which is a big plus.
Why Altimmune is a compelling option
Compared to Viking, Altimmune's GLP-1 pipeline is half a step ahead. Its lead program just concluded its phase 2 trials, with a continuation onto phase 3 trials nearly guaranteed on the basis of the strong interim data. It's slated to meet with regulators at the Food and Drug Administration (FDA) sometime in Q3 to discuss its plans to proceed.
At this stage in the game, Altimmune's published data do not clearly indicate that its candidate causes weight loss as quickly as Viking's, though it also appears not to suffer from a plateau effect. Patients treated with the candidate in the highest dose group lost an average of 15.6% of their mass over 48 weeks of the phase 2 study.
Still, on the basis of available data, it does have a powerful advantage that none of the other candidates or contenders can claim: preservation of muscle mass during weight loss.
In the relatively brief history of GLP-1 medicines for obesity, patients losing a lot of their lean muscle mass alongside their fat mass during their months of treatment has been a major concern. Especially for older people and those with chronic conditions, rebuilding lost muscle mass can be very difficult, and the breakdown of muscle mass can cause health problems.
The implication is that if its candidate gets approved, it will probably become the GLP-1 weight loss intervention of choice for seniors, people with muscle maintenance disorders, and people with mobility issues. In those segments, as of right now, it doesn't really have any direct competition, and that is likely to continue. So the presence of strong incumbents isn't a dealbreaker.
Much like Viking, it has no debt to speak of. In terms of its cash holdings, Altimmune has $182 million in cash, equivalents, and investments as of Q1. Its TTM total expenses are $89 million. It'll need to take out some debt or issue more shares of its stock before commercializing its candidate, but it isn't about to run out of money in the meantime.
It could make sense to buy both, but one is a bit safer
There's nothing wrong with buying Viking Therapeutics as well as Altimmune to position yourself for upside from their GLP-1 programs. As of today, both companies have very promising candidates that have good odds of completing their final clinical trials and securing regulatory approval in the next couple of years.
But if you had to pick one, pick Viking. There are two decisive factors: Its massive war chest of cash, and its larger pipeline that includes non-GLP-1 programs.
The cash means it can survive and go on to succeed if things don't go exactly as planned. The non-GLP-1 programs mean that it has a lifeline in the very unlikely event that serious problems are discovered that pertain to the entire class of drugs. Altimmune is all in on GLP-1, at least for now, so it'd be in a much harder place.
In practice, Altimmune is the riskier pick, but it could also have more upside in store. Viking, with its shares recently inflated by a spate of good news, will need to work a bit harder to justify its valuation, but there's still likely plenty of upside left too.
Editor's note: This article has been corrected. Altimmune's lead program already concluded its phase 2 trials, with a continuation onto phase 3 trials nearly guaranteed on the basis of the strong interim data.
Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
