VKTX Stock Slides After-Hours On $400M Stock-And-Notes Raise After Tuesday’s Rally

The San Diego biotech said it intends to offer $200 million of common stock and $200 million of convertible senior notes due 2032, subject to market conditions.

• The company said it would use the money to continue developing and, later, commercializing its lead obesity drug, VK2735. 
• The raise comes a day after Viking reported positive results from a maintenance study of VK2735, spurring a 36% rally. 
• Viking is already running two large late-stage studies of the injectable version of VK2735 with plans for another trial of the oral version slated for later this year.

Shares of Viking Therapeutics (VKTX) fell sharply by 9% after-hours on Wednesday after the company said it plans to raise about $400 million through stock and convertible notes.

VKTX finished regular trading at $41.65, up about 2% on the day. The stock fell after-hours as investors reacted to the dilution risk one day after a large 36% rally.

What Viking Is Selling

The San Diego biotech said it intends to offer $200 million of common stock and $200 million of convertible senior notes due 2032, subject to market conditions. Underwriters may buy another $30 million of stock and $30 million of notes. The two deals do not depend on each other.

The notes would be senior and unsecured. Holders would receive interest twice a year and could convert the notes into stock under certain conditions. They mature on Oct. 15, 2032.

The offerings are not yet priced. The company said it would use the money to continue developing and, later, commercializing its lead obesity drug, VK2735; advance VK3019; and fund research, working capital, and general corporate needs.

Why The Timing Matters

The raise comes a day after Viking reported positive results from a maintenance study of VK2735, a dual GLP-1/GIP shot designed to treat obesity. Patients who stayed on a weekly 17.5 mg dose had about 22% placebo-adjusted weight loss by week 33, with no plateau. Those who switched to shots every other week or once a month kept most of that loss. Gut side effects in the maintenance phase looked similar to placebo. The trial results raised optimism that Viking could carve out a spot in the weight-loss market currently dominated by Novo Nordisk and Eli Lilly & Co. None of Viking’s drugs, however, are FDA-approved.

Viking is already running two large late-stage studies of the injectable version of VK2735. It has said it plans to start a late-stage trial of an oral version later this year. VK3019, a separate amylin-based weight-loss candidate, entered early-stage studies in June.

Retail Traders Stay Bullish, Expect Buyout

On Stocktwits, retail sentiment around VKTX stock stayed ‘extremely bullish’ over the past 24 hours, while message volume remained ‘extremely high.’

A Stocktwits user expressed optimism that the company could be bought out before the end of the year. The user further termed it “the number 1 acquisition target in the biotech industry.”

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Another user dismissed the after-hours selloff as an overreaction, calling it disproportionate to the possible dilution.

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A third user opined that an increased cash balance will improve chances of a buyout.

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VKTX stock has gained 18% year-to-date. 

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