Wall Street Lunch: Viking Weight-Loss Pill Data Is Striking
Trevor Williams
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Those with 100mg doses of VK2735 lost an average of 8.2% of body weight. (0:15) Peloton snags a double upgrade. (2:41) Regulators nix Talen-Amazon power deal. (3:47)
This is an abridged transcript of the podcast.
Our top story so far. Shares of Viking Therapeutics (NASDAQ:VKTX) are surging after the biotech reported promising results for its experimental obesity pill, with increased weight loss observed at higher doses.
Patients on 100-milligram doses of Viking’s VK2735 lost an average of 8.2% of their body weight after 28 days in an early-stage study, or 6.8% more than those taking a placebo.
The study included 92 people, taking a variety of dose levels, with 100 milligrams the highest. There were no discontinuations of the drug at the highest dose, with the most common side effects being constipation, nausea, and vomiting, similar to other obesity drugs.
VK2735 is a dual GLP-1/GIP receptor agonist similar to Eli Lilly’s (LLY) blockbuster weight loss drug Zepbound, designed to treat obesity and other metabolic disorders.
Viking plans to begin a phase 2 study of the oral VK2735 for obesity before the end of 2024. The oral version is being developed as an alternative for patients hesitant for injection-based therapy, looking to maintain their weight loss, or transitioning away from the injectable version of VK2735.
According to Dow Jones, Stifel analyst Annabel Samimy says: “Both oral and injectable VK2735 continues to boast one of the most competitive profiles in the obesity space, with strong efficacy and tolerability and now a potential for versatile monthly dosing for maintenance therapy.”
In today’s trading, stocks are understandably cautious with the election on Tuesday and then a Fed decision on Thursday. Treasury yields, on the other hand, are significantly lower across the curve.
Carol Schleif, chief investment officer at BMO Family Office, says: “Any volatility this week would be a normal pullback in our view and an opportunity to put new cash to work, especially cash that has been sitting on the sidelines.”
For the Fed, companies “need to see a steady rate-cutting pace rather than a more fitful and wait-and-see approach,” she said. “A 25 basis point rate cut on Thursday would also be consistent with the Federal Reserve’s recent indications that it’s more focused on the employment side of its dual mandate.”
On the macro front, September factory orders fell 0.5% M/M, compared with the 0.4% decrease expected and August’s 0.8% retreat (revised from -0.2%). Factory order excluding transportation: +0.1% vs. -0.2% prior (revised from -0.1%).
Among active stocks, Bank of America upgraded Peloton Interactive (PTON) two notches to a Buy from Underperform.
Analyst Curtis Nagle says PTON can exceed $300 million in EBITDA this year and see more than $400 million as possible over the next few years. The upgrade is also tied to the view that under a new CEO there is the potential for more operating expenses cuts, higher hardware margins, and subscription price increases.
Marriott (MAR) lowered its FY24 outlook below expectations as ongoing softness in China continued to weigh on profitability.
Marriott now expects to earn a profit of $9.19 to $9.27 per share from previously lowered guidance of $9.23 to $9.40 per share, which is below the consensus estimate of $9.43. At the same time, the forecast for gross fee revenues was lowered to a range of $5.126 billion to $5.146 billion from $5.13 billion to $5.189 billion.
And Sherwin-Williams (SHW) is higher after Dow Jones Indices said late Friday that it will replace Dow Inc. (DOW) in the venerable Dow Jones Industrial Average. Nvidia (NVDA) is also joining, replacing Intel (INTC) as many had predicted.
In other news of note, Talen Energy’s (TLN) is tanking, weighed down by the Federal Energy Regulatory Commission’s rejection of an interconnection agreement with an Amazon (AMZN) data center.
The amended interconnection deal would have supplied more power from Talen Energy’s Susquehanna plant to the Amazon data center at the nuclear power plant in Pennsylvania.
Members of FERC said the deal could raise power bills for the public and affect the grid’s reliability.
FERC commissioner Mark Christie says: “Co-location arrangements of the type presented here present an array of complicated, nuanced, and multifaceted issues, which collectively could have huge ramifications for both grid reliability and consumer costs.”
Shares of other nuclear plays are also under pressure, with Constellation Energy (CEG), Vistra (VST), and Public Service Enterprise Group (PEG) all down.
And in the Wall Street Research Corner, BTIG technical strategist Jonathan Krinsky is expecting further downside pressure for stocks.
“While there was finally a little shakeout last week, we continue to see risk into the 5500-5650 zone for SPX where there is better support. If last week was the appetizer, this week should be the main course with the election followed by FOMC,” Krinsky said.
He highlighted that the Consumer Confidence survey shows the highest percentage of participants (51.4%) are anticipating stocks to increase in the year ahead.