Viking Therapeutics Inc (VKTX)

[greens12]

"For valuation purposes, we have constructed a probability adjusted discounted cash flow model that takes into account potential revenues from VK5211 in hip fracture, VK2809 in NASH, and VK0214 in ALD.

We model for peak revenues for VK5211 of approximately $600 million in the U.S. and $1 billion in the E.U. based on compelling preclinical and early clinical data. We look forward to analyzing the data from the ongoing Phase 2 study of VK5211 for the treatment of hip fracture in late summer 2017.

"We estimate potential peak worldwide revenues for VK2809 of $2.5 billion based upon the low level of adverse events seen with the drug in early clinical testing along with data that is just as good if not better than current treatment options for dyslipidemia. We anticipate topline results from the recently initiated Phase 2 study of VK2809 in hypercholesterolemia and fatty liver disease in the fourth quarter 2017.

For ALD, since it is an orphan indication we believe the drug would likely command premium pricing, thus we model for a yearly cost of $150,000 in the U.S. and $120,000 in Europe, leading to estimated peak worldwide sales of approximately $450 million.

Based on these numbers, and using an 18% discount rate, we arrive at a valuation of $8/share. We continue to believe that Viking’s shares are significantly undervalued. This is particularly evident on a comparative basis with Madrigal Pharmaceuticals, Inc. (MDGL), which is developing a TRß agonist that is also in Phase 2 testing for the treatment of fatty liver disease. We believe Viking’s TRß agonists have potentially superior efficacy and fail to see why Viking is trading at approximately 1/6th the valuation of Madrigal. Small-cap biotech investors should take a serious look at Viking ahead of data readouts later in 2017."