Three Biotechs Bolstered by Positive News
I will end the trading week on an optimistic note. Both of my articles posted this week have been around the myriad problems I see around the markets and the economy. In today’s column, I will highlight some positive news emanating from the biotech sector, which has been a market laggard over the past month or so.
M&A deal volume feels like it has abated some in the third quarter after a notable rise in the first half of this year. And nothing gets investors’ juices flowing more in this space than a spate of acquisitions happening with big buyout premiums. On that front, Novo Nordisk ($NVO) leadership indicated it’s likely on the hunt for potential strategic purchases. This came among a business update this week that left investors a bit blah. Employees weren’t in any better mood as the company also announced another round of layoffs. Early today, the company announced an up to $1.3 billion global licensing deal.
In addition, one company in the burgeoning GLP-1 space delighted shareholders this week: Viking Therapeutics ($VKTX), a name I have touched on from time to time in these pages over the past couple of years. The company disclosed top-line data from a VK2735-102 maintenance study on Wednesday that was quite impressive in a couple of key ways. VK2735 is a dual GLP-1 receptor antagonist.
Over 21 weeks of the trial’s first phase, around 16% to 19% weight loss was triggered compared to no weight gain from the placebo phase. The 12-week maintenance phase testing that followed was noteworthy. A biweekly injection maintained 97% of that weight loss and a once-a-month injection saw 90% of the weight loss maintained. This compared to only 61% of weight loss maintained in the placebo group.
The stock spiked over 30% on Wednesday following this data release. Management used the rally to raise some $500 million in proceeds from a secondary offering and senior convertible notes. The stock fell 12% on Thursday on the capital raise. This is typical from clinical stage biotech firms when good news boosts the stock price. The main reason I never chase one-day rallies. That said, the trial news does make Viking a more desirable buyout target. Not by Novo Nordisk, but perhaps by a larger drug firm that wants to establish a beachhead in the burgeoning GLP-1 market.
Omeros ($OMER) was upgraded to “Overweight” from “Neutral” on Tuesday on Cantor Fitzgerald. I last gave a shout out to this name at the close of 2025. In August, the company posted quarterly results. Yartemlea, which became the first Food and Drug Administration-approved treatment for hematopoietic stem cell transplant-associated thrombotic microangiopathy (TA-TMA) in late 2025, is gaining serious traction at transplant centers. Sales for the therapy came in at $28.5 million in Q2. This was up 190% sequentially from Q1 and easily exceeded expectations.
Cantor Fitzgerald’s analyst upped her peak sales estimate for the treatment at $400 million. Omeros has a current market cap of roughly $1.5 billion. Cantor’s analyst assumed no sales outside of the United States it should be noted. Also of note, AstraZeneca’s ($AZN) Ultomiris failed in a late-stage study targeting TA-TMA in July. The current analyst firm consensus sees 70 cents a share of earnings in fiscal 2026 with profits rising to nearly three bucks a share in fiscal 2029. With shares trading at around $20 a share, the shares make a solid growth-at-a-reasonable-price play that I will continue to have a covered-call position within.
At the time of publication, Jensen was long NVO, OMER & VKTX.
