It’s been a good year for the stock market as a whole and a tremendous year for a couple of drugmaker start-ups. Shares of Viking Therapeutics (VKTX -1.75%) and Summit Therapeutics (SMMT -0.22%) more than doubled in 2024.
Quick gains are often lost on Wall Street, but the investment bank analysts who follow these stocks think they’ll climb much higher in 2025. BTIG analyst Justin Zelin thinks Viking Therapeutics stock can reach $125 per share for a gain of about 166% over the next 12 months. Over at Wells Fargo, Mohit Bansal recently issued a $30 price target for Summit Therapeutics, suggesting the cancer drug developer can climb by another 68% in the year ahead.
1. Viking Therapeutics
From the end of 2023 through Dec. 12, 2024, shares of Viking Therapeutics shot 157% higher. If an experimental weight loss treatment it’s developing continues to succeed in clinical trials, the stock could more than double again.
Viking Therapeutics has no approved drugs to sell, but a candidate it’s developing, VK2735, could become a leading weight management drug. It’s a dual GLP-1 and GIP receptor agonist similar to tirzepatide from Eli Lilly.
The Food and Drug Administration (FDA) approved tirzepatide to treat diabetes in 2022 and expanded its approval to include weight management in late 2023. Sales of Lilly’s drug rocketed to $11 billion during the first nine months of 2024.
Viking Therapeutics stock has been soaring because mid-stage clinical trial results suggest VK2735 can earn a large share of the market for dual GLP-1 and GIP receptor agonists. In November, we saw results from an ascending dose study. Patients given the highest dosage tested reduced their weight by 8.2% after four weeks, 6.8% compared to the placebo group.
In March, Viking Therapeutics’ stock rocketed higher when the company presented early-stage clinical trial results from an oral version of VK2735. Patients receiving the highest dosage reduced their weight by 5.3%, or 3.3% compared to the placebo group, after 28 days.
2. Summit Therapeutics
Summit Therapeutics could have a new cancer therapy that helps the immune system fight tumors. One of the most successful immunotherapies of all time, Keytruda, addresses the programmed death ligand-1 (PD-1) pathway that tumors exploit to shut down the immune system when it attacks.
Merck recorded sales of Keytruda that grew to $25 billion last year. Summit Therapeutics stock is up by about 583% in 2024 because it licensed a drug that appears to outperform Keytruda.
Ivonescimab is a bispecific antibody that shuts down PD-1 and vascular endothelial growth factor (VEGF) at the same time. In the Harmoni-2 study with lung cancer patients who were newly diagnosed with advanced-stage disease, patients treated with ivonescimab were 49% less likely to worsen compared to patients given Keytruda.
Summit doesn’t own ivonescimab. It licensed rights from Akeso to develop and market it outside of China. In May, Akeso earned approval to market the drug throughout China as a treatment for second-line lung cancer patients who progressed after their first line of treatment.
The FDA won’t approve a new cancer drug for marketing in the U.S. without a large phase 3 trial that enrolls lots of North American patients. Investors won’t have to wait too long to see whether it has a shot in the U.S. market. This October, Summit completed enrolling second-line lung cancer patients into the phase 3 Harmoni trial. Given the numbers we’ve already seen in China-based trials, the U.S. Harmoni study is widely expected to succeed.
More gains ahead?
Before you jump at either of these stocks, it’s important to remember that Wall Street analysts can quietly adjust their price targets downward if things don’t work out as hoped. Repairing the damage that following a bad call can inflict on your portfolio isn’t as simple.
Viking Therapeutics’ experimental weight loss drug still needs to run a years-long phase 3 trial before we know whether VK2735 can rake in tirzepatide-sized sales. Unfortunately, many sales for the experimental therapy are baked into the stock’s $5.2 billion market cap. The stock could shoot higher, but it’s only appropriate for investors who can tolerate a lot of risk.
Expectations for Summit Therapeutics are even higher than expectations for Viking Therapeutics. Its $13.2 billion market cap at recent prices could come crashing down if long-term overall survival data isn’t as convincing as the progression-free survival results ivonescimab has already produced. Wall Street analysts aren’t wrong to suggest this stock can shoot higher, but it presents more risk than most investors can handle.
Wells Fargo is an advertising partner of Motley Fool Money. Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck and Summit Therapeutics. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.
