Better Rising Biotech: Viking Therapeutics vs. Summit Therapeutics

The market could see the emergence of new leaders in the biotechnology industry. Since the year began, Viking therapeutics (VKTX -1.11%) and Summit Therapeutics (SMMT -8.44%)two makers of clinical-stage drugs, have seen their shares soar. The reason? Both companies announced promising clinical progress for their lead candidates.

While there’s still some way to go before they launch their products, it’s hard to argue with the results that Viking and Summit have already achieved. And if they can get that far, they could provide excellent long-term returns. But which one looks more attractive?

SMMT data by YCharts.

The case for Viking Therapeutics

Viking Therapeutics’ lead pipeline candidate, VK2735, is a potential dual GLP-1/GIP drug. Both classes of drugs help control satiety, but with different mechanisms. A single approved therapy combines these two categories: Eli Lillythe obesity drug Zepbound, whose sales are growing at a dizzying pace. Could the VK2735 be nearly as successful? In a phase 2 study, the drug led to a placebo-adjusted mean weight loss of 13.1% at the highest dose level over 13 weeks.

Although it still needs to undergo a phase 3 clinical trial, VK2735’s results were impressive enough to send shares of Viking Therapeutics through the roof. Some analysts also predicted luscious potential sales for the drug. William Blair’s Andy Hsieh projects potential peak sales of $21.6 billion, with about two-thirds of that total coming from the US market. However, it’s important to note that the likelihood of drugs reaching $20 billion in annual sales is incredibly low.

Viking Therapeutics has other programs as well. The company is working on an oral version of VK2735 that has also produced promising Phase 1 results. Elsewhere, the company’s VK2809 is a potential therapy for steatohepatitis associated with metabolic dysfunction. VK2809 has passed phase 2 studies and is now moving forward. Viking Therapeutics is expected to conduct a pair of Phase 3 trials in the next year.

If they’re successful, and if its lead candidates win approval, expect Viking Therapeutics stock to skyrocket even further.

The case for Summit Therapeutics

Summit Therapeutics is an oncology specialist with a potential gem on its hands. The company’s ivonescimab could become a billion-dollar cancer drug. In 2023, Summit Therapeutics signed a license agreement with the original developer of ivonescimab, China-based Akeso Biopharma. Under their agreement, Akeso retains the rights to market ivonescimab in China, but Summit now holds licensing rights in the US, Europe, Canada, the Middle East, Japan, South America, Central America, the Caribbean and Africa.

Summit distributed $474.9 million in cash and 10 million of its stock for the rights to ivonescimab in these regions. Summit will also pay Akeso development milestones and royalties.

It is worth noting that the drug has already been approved in China. And it recently posted some impressive phase 3 clinical trial results. As reported by Summit Therapeutics, an Akeso-led late-stage trial of ivonescimab in China reduced the risk of disease progression or death by 49% compared to MerckKeytruda in patients with non-small cell lung cancer (NSCLC) expressing the PD-L1 protein. Keytruda is the market leader and the best-selling drug in the world. It generated $25 billion in sales last year.

Ivonescimab is the first cancer drug to beat Keytruda in a head-to-head Phase 3 clinical trial in NSCLC. Summit Therapeutics is planning Phase 3 trials in the US to support the approval of ivonescimab in the regions where it holds the rights to the drug. Ivonescimab is also being developed in a number of other indications beyond NSCLC. The future looks bright for Summit Therapeutics if all goes smoothly.

verdict

Viking Therapeutics and Summit Therapeutics have no products on the market, generate no revenue and are not profitable. It may be a challenge for biotech companies with this profile to generate funding, but given their recent clinical progress, it won’t be a problem for any of these drugmakers. So in my opinion, funding won’t be an obstacle for Viking or Summit, at least for the foreseeable future. One way to decide which stocks are the best option is their ratings. Viking Therapeutics’ market cap is $6.86 billion.

Summit Therapeutics is more than twice that at $17.39 billion. Summit is worth more because its lead candidate has already received regulatory approval in one country and passed another Phase 3 study. That said, at current levels, Viking Therapeutics likely has more upside potential, so that more aggressive investors should consider this option. However, it also poses more risks. Summit Therapeutics is a safer bet given ivonescimab’s already extensive clinical data.

However, both stocks could fall off a cliff if there are setbacks in their leadership programs. Invest accordingly.