These Two GLP-1 Plays Gained Big, But Are They Buys?

Let's look at two stocks in the burgeoning GLP-1 space, why they rallied and how I'd approach each. Remember, GLP-1 drugs are popular for their ability to lower blood sugar levels and to help people lose weight.

First is Viking Therapeutics VKTX, which was up nearly 8% in trading on Tuesday. The drug-developer's stock also crossed over its 50-day moving average for the first time since late last year. 

What happened? Last week, management said that the subcutaneous version of Viking's GLP-1 candidate VK2735, will begin Phase 3 clinical studies this quarter. In addition, enrollment for a Phase 2 trial for the oral version of this compound has now been completed.

But what really got the stock going were outside comments from the CEO of Pfizer PFE, Albert Bourla, who said the drug giant was looking at deals to add cardiometabolic drugs, including obesity therapies, to replenish the company’s pipeline. Given that Pfizer just dropped developmental efforts around its internal GLP -1 candidate, Viking would be a logical acquisition given it is moving its primary candidate in that space into late-stage development.

Next we have the stock of LifeMD, Inc. LFMD, which was up better than 40% in trading yesterday. I last highlighted this name in mid-March. 

What happened? This telehealth provider moved into the women’s health space after announcing Monday that it had purchased some assets from Optimal Human Health MD, a nationwide women’s health virtual care provider.

But what triggered the big rally in the stock on Tuesday was the announcement from Hims & Hers Health HIMS, which also offers telehealth services, that it's partnering with drug giant Novo Nordisk NVO. Novo will allow all doses of Wegovy to be available through Him's & Her’s virtual care platform for cash-paying patients. LifeMD's own GLP-1 weight management offering was launched in the first half of 2023 and has been a core driver of the company’s recent growth. Investors are obviously hoping LifeMD will soon announce a similar deal.

I would probably wait for a pullback in LFMD, before adding to my stake. It should be noted the company posted very solid fourth-quarter results in mid-March that exceeded expectations. I did add a few shares to my Viking stake on Tuesday via covered call orders, in one of my few trades this week. I feel a deal with Pfizer is too good of a fit to not at least have a decent shot of happening in 2025.

At the time of publication Jensen was long LFMD, PFE and VKTX