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VKTX: Biohacker's Buy?

|Includes: Viking Therapeutics, Inc. (VKTX)

You may be familiar with "BulletProof Coffee," which is Dave Asprey's butter-coffee-MCT concoction that he claims increases energy and cognitive function. It is made using grassfed butter, "detoxified" coffee beans, and medium-chain triglyceride oil, which are all blended together into a creamy, latte-like coffee drink. Full disclosure: I have tried the coffee; it's delicious.

Asprey is a Silicon Valley investor who dedicated several years to studying his body, and spent over $300,000 to do so. He claims to have lost over 100 pounds, increased his IQ by at least 20 points, and decreased his biological age. Asprey says he achieved all this via "bio-hacking," or optimizing his body's biochemical processes.

The "Bulletproof Exec" tweeted a recent blog post to his 350,000 followers; it discusses a group of PEDs known as selective androgen receptor modulators (SARMs), of which VK5211(LGD-4033) is a member. Asprey discussed the proposed benefits and theoretical risks of SARMs, and mentioned a handful that are made "for research purposes only." VK5211 is the only SARM currently in clinical trials.

My article on VKTX, "Viking Therapeutics: Barbaric Value," mentions the way SARMs, particularly LGD-4033 (VKTX's VK5211), have been embraced by the bodybuilding/athletic communities due to their ability to increase strength and muscle mass. In a recent blog post, I discussed the story of former University of Florida QB, Will Grier's, experience with LGD-4033.

Why is this relevant to VKTX? Asprey's recognition of the potential benefits of SARMs, specifically LGD-4033(VK5211), in terms of gaining strength and building muscle may lend further support (albeit weak) to the notion that we may see positive results from VKTX's phase two trial of VK5211 in 2Q17. I discussed in the "Barbaric Value" piece that investors often look for any bits of information to help them make educated guesses on companies. This may be another subtle (not-so?) endorsement of SARM's efficacy. Obviously, this is only one piece of the puzzle, they need to be safe as well.

At the Biotech Showcase in San Francisco earlier this month, VKTX CEO Dr. Brian Lian described VK5211 as being worth $1 billion in potential revenues. He also discussed VKTX's VK2809, which is also slated to have results released in 2Q17, and also valued by analysts at over $1 billion in future revenues. Analysts and investors believe that VKTX would likely partner up with large pharma, or get acquired before either drug actually makes it to market.

As I've mentioned previously, both drugs together, could yield upwards of $2.5 billion in future revenues. This would translate to $125 per share in current terms. VKTX's current share price of $1.34, denotes a market valuation of just $26 million. While VKTX shares likely aren't independent long enough to see the $125 level, a partnership of $500 million (conservative estimate for sake of argument) on just ONE of the two drugs VKTX currently has in phase two trials, would equate to $25 per share in market value. As I see it, this could make VKTX shares a big "bio-hacking buy."

Disclosure: I am/we are long VKTX.