2024 has been a remarkable year for the stock market, especially for two rising stars in the biotech space: Viking Therapeutics (NASDAQ: VKTX) and Summit Therapeutics (NASDAQ: SMMT). Both companies have seen their share prices more than double over the past year, thanks to groundbreaking advancements in their respective fields. According to top Wall Street analysts, the momentum might not stop there.
BTIG analyst Justin Zelin has set a price target of $125 for Viking Therapeutics, projecting a staggering 166% upside for 2025. Meanwhile, Wells Fargo’s Mohit Bansal forecasts a 68% potential climb for Summit Therapeutics with a $30 price target. Let’s dive deeper into why these companies are catching Wall Street’s attention and explore the opportunities (and risks) they present.
1. Viking Therapeutics: A Weight Loss Contender
Performance in 2024
Shares of Viking Therapeutics have soared by 157% from the end of 2023 through mid-December 2024. Much of this success is tied to the company’s development of VK2735, an experimental weight-loss drug poised to disrupt a multibillion-dollar market.
VK2735 is a dual GLP-1 and GIP receptor agonist, similar to tirzepatide, a blockbuster drug from Eli Lilly that has dominated the weight-loss and diabetes markets. Tirzepatide, approved for diabetes in 2022 and weight management in 2023, achieved $11 billion in sales during the first nine months of 2024. Viking's VK2735 has the potential to grab a significant slice of this lucrative market.
Promising Clinical Data
The excitement around VK2735 stems from its promising clinical trial results:
- November 2024: In a mid-stage trial, patients receiving the highest dose of VK2735 achieved an 8.2% weight reduction after just four weeks, compared to a 6.8% reduction over placebo.
- March 2024: Early-stage trials of an oral version of VK2735 showed weight reductions of 5.3% after 28 days, or 3.3% compared to placebo.
While these results are early-stage, they suggest VK2735 could achieve competitive, if not superior, efficacy compared to existing weight-loss drugs like tirzepatide.
Market Opportunity
The market for obesity treatments is massive and growing, with analysts predicting it could reach over $100 billion annually by 2030. Viking Therapeutics, with its innovative VK2735 candidate, is well-positioned to tap into this market if its phase 3 trials succeed.
However, investors should note that VK2735 is still in clinical development, and the years-long phase 3 process presents significant risks. Viking’s $5.2 billion market cap already reflects high expectations, which could amplify the downside if results disappoint.
2. Summit Therapeutics: A Cancer Therapy Breakthrough
2024: A Transformational Year
Summit Therapeutics has been a standout performer, with its stock price surging 583% in 2024. The catalyst? A licensing deal for ivonescimab, a promising new immunotherapy drug that could rival Merck’s Keytruda, one of the best-selling cancer therapies of all time.
Keytruda, which generated $25 billion in sales in 2023, works by targeting the PD-1 pathway, a key mechanism tumors use to evade the immune system. Summit’s ivonescimab takes this approach a step further by targeting both PD-1 and VEGF (vascular endothelial growth factor) pathways simultaneously.
Clinical Evidence of Superiority
The buzz around ivonescimab is fueled by impressive clinical trial data:
- In the Harmoni-2 trial for advanced-stage lung cancer, patients treated with ivonescimab were 49% less likely to see disease progression compared to those receiving Keytruda.
- The drug is already approved in China, where its developer, Akeso, markets it for second-line lung cancer patients.
By shutting down two critical pathways that tumors exploit, ivonescimab could deliver superior outcomes compared to single-target therapies like Keytruda.
U.S. Approval Pathway
Summit Therapeutics doesn’t own ivonescimab outright—it licensed the rights from Akeso to develop and commercialize the drug outside of China. To secure FDA approval for the U.S. market, Summit is conducting a large-scale phase 3 trial (Harmoni), which completed patient enrollment in October 2024.
If the U.S. trial replicates the success seen in China-based studies, ivonescimab could become a blockbuster drug, potentially reshaping the immunotherapy landscape.
Market Opportunity and Risks
Summit’s $13.2 billion market cap reflects high investor expectations. While ivonescimab shows tremendous promise, the bar for FDA approval is high, and any hiccups in the phase 3 process could trigger significant downside. Moreover, long-term survival data will be crucial to determining whether ivonescimab lives up to its early potential.
Why Wall Street Analysts Are Bullish
Viking Therapeutics: A 166% Upside?
BTIG’s Justin Zelin projects Viking Therapeutics could reach $125 per share in 2025, a 166% gain from current levels. This optimism is driven by the size of the obesity market and the competitive positioning of VK2735.
If Viking’s phase 3 trials succeed, VK2735 could challenge tirzepatide and Novo Nordisk’s Wegovy for market share. However, the road to commercialization is long, and competition is fierce.
Summit Therapeutics: A 68% Upside
Wells Fargo’s Mohit Bansal has a price target of $30 for Summit, implying a 68% upside. The key driver here is ivonescimab’s potential to outperform Keytruda and become a dominant immunotherapy for lung cancer.
The phase 3 Harmoni trial will be pivotal, as will regulatory decisions in the U.S. and Europe. While the risk is high, the potential rewards for investors could be transformative.
The Risks Investors Should Consider
While Viking Therapeutics and Summit Therapeutics offer significant upside potential, they also come with considerable risks:
- Clinical Trial Uncertainty: Both companies rely on ongoing trials for their lead candidates. Negative results could drastically impact their valuations.
- Valuation Concerns: Both stocks have lofty market caps that already reflect high expectations, leaving little room for error.
- Competitive Pressure: The biotech space is fiercely competitive, with established players like Eli Lilly, Novo Nordisk, and Merck potentially outmaneuvering smaller players.
Investors should weigh these risks carefully and ensure they have a high tolerance for volatility before considering these stocks.
Final Thoughts
Viking Therapeutics and Summit Therapeutics are two of the most exciting biotech stocks to watch in 2025. Both have the potential to deliver game-changing therapies in weight loss and cancer treatment, respectively, which could lead to significant stock price gains.
However, these stocks are not for the faint of heart. The high-risk, high-reward nature of biotech investing means that fortunes can change quickly based on clinical trial results or regulatory decisions.
If you’re considering these stocks, it’s essential to do your due diligence and ensure they align with your risk tolerance and investment goals. While Wall Street analysts are bullish, always remember that no stock is a sure thing.
For investors willing to embrace the risks, Viking Therapeutics and Summit Therapeutics could be well worth watching in 2025.