1/ In the first 2 threads we looked at the viral genome and the protein capsid. There are 2 other major structural components of the virus with the binding proteins and a membrane.
2/ All viruses come with proteins that project from their surface. These are ligands that bind to specific receptors on cells to gain entry. These proteins give the virus its tropism.
3/ The concept of tropism means a virus will only be able to infect cells of tissues that display the receptor for the proteins it has on its surface. Each virus will have different proteins on its surface which will make it able to infect specific tissues.
4/ The influenza virus has a protein called Hemagglutinin which binds to the Sialic Acid receptor in the upper and lower respiratory tract. This gives influenza tropism for the respiratory tract.
5/ The HIV virus has a protein called the glycoprotein that binds to CD4 on helper T cells and Dendritic cells to make entry. It also uses a co-receptor of the T cell with CCR5 or CXCR5 to bind. This gives HIV tropism for Helper T cells.
4/ The Hepatitis B virus (HBV) has 3 proteins on its surface with an L, M and S protein. The HBV virus will make binding to the heparin sulfate receptor with one protein then use others to make binding to the NTCP and EFGR receptors.
5/ This gives Hepatitis B tropism to the liver.
6/ For a cell to become infected with a virus, it must be susceptible and permissible for infection. Susceptible means that cell has the receptor for that virus to make entry. Permissible means that cell is capable of allowing the virus to replicate inside.
7/ Susceptible is the idea of tropism, but permissible is a factor of the cell itself. Not every cell will be able to allow viral replication. This can often be related to cellular host defenses like Interferons and the Antiviral state.
8/ The last part of the virus is the membrane. Not every virus will have a membrane. When the virus only has a protein shell, we call it a capsid. When the virus has a membrane, we call it a nucleocapsid. We call a virus with a membrane and enveloped virus.
9/ When a virus has no membrane the protein structure is very strong. This makes these viruses very hardy. They can survive on surfaces for long periods of time. They can also survive the low Ph of the stomach.
10/ All enteroviruses are this kind of structure. They make up one of the many families that cause Gastroenteritis. Another is the Norovirus which is commonly called the Cruise ship virus. This baby is even resistant to hand sanitizers. Always wash your hands before eating.
11/ The membrane gives viruses benefits. It makes them slippery so they are harder to target by host immunity. They have lipid membranes which helps them blend in with the cells of the host.
12/ The membrane makes them less hardy outside the body. They don't live as long before they dry out. They also don't survive the Ph of the stomach. The Corona virus is an example of an enveloped virus.
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Its my desire to build a master thread and then put it on my highlights for sharing my 30 years of investing research framework for Biotech companies. I consider Fundamentals tell me what to buy. Its a measure on company quality. Valuation tells me when I should buy. It tells me If I am overpaying or getting a bargain on buying any company. Combining fundamentals, valuation and patience has done very well for me in investing for many years. I am sharing this to give you my framework so that it may inspire you in building your own framework.
The Fundamental Framework:
Fundamental Score (0–10): Full Criteria
A 6‑category rubric, with 4 categories scored 0–2 and 2 categories scored 0–1, for a maximum of 10 points.
1. Science & Platform Strength (0–2)
2 points — Strongly differentiated science; validated or de‑risked mechanism; platform can generate multiple assets. Think RNAi or ADC like technologies that lead to multiple big drugs.
1 point — Plausible, partially validated science; some differentiation; platform potential but unproven. Think one hit wonders or early stage concept companies with unvalidated technology.
0 points — Weak or non‑differentiated mechanism; unclear biology; no platform leverage.
2. Pipeline Depth & Breadth (0–2)
2 points — Multiple credible shots on goal; diversified by indication, modality, or stage; clear sequencing strategy.
1 point — Some pipeline depth but concentrated risk; limited diversification.
2 points — Strong, consistent, statistically meaningful efficacy and safety; reproducible across cohorts or studies. Best in Class data, First in Class mechanism or Breakthrough Therapy is a strong sign.
1 point — Early or mixed data; promising signals but not yet robust.
0 — Weak, inconsistent, negative, or unsafe data.
4. Management Quality & Execution (0–2)
Follow what they promise and then what they actually deliver. Take notes on calls and make sure they live up to what they promise.
1 point — Realistic economic TAM ≥ $1B for the company’s actual monetizable opportunity (pricing, reimbursement, share, duration, competition). Make sure to consider partners take.
0 points — Economic TAM < $1B or structurally constrained.
6. Cash Runway & Balance Sheet (0–1)
1 point — At least 2 years of cash runway at current or reasonably projected burn; low near‑term dilution risk.
0 points — <2 years runway or high likelihood of near‑term, punitive financing.
The Valuation Framework:
I use a sum of the parts valuation. This requires me to value each drug one by one. Then I add in the cash and subtract the debt. I then divide my market cap calculation of all the parts by the outstanding share count. The shares out can be found on the latest 10Q or 10K at bottom of first page.
There are 2 key numbers I use in calculating the value of each drug. The first is I need the peak sales for each indication. That can come from an average of analysts estimates, or I can take the numbers from the company they give out during conferences and calculate peak sales myself.
The other number is the multiplier. This is determine through many years of watching companies price assets through acquisitions and market reactions to success and failures of programs. I use .1x for anything with no phase 1 data yet. 1x for clean phase 1 data, 2x for good phase 2 data, and 3x for good phase 3 into early commercial. Most late stage buyouts happen at 3x peak sales estimates. Its not perfect, but it gets me in the right ballpark.
Once I have the value of each drug with each indication, I add them up with cash and subtract the debt.
This is my updated profile for Viking. They are 1 of my 5 Innovators. They are in the mid stage and moving into later stages of development. They have some validation, but still a long way to get across that finish line.
Management:
Intro to Management:
I have been following this company on and off for several years, so I know the management well. So far, I had time to catch up on the company by listening to several of their webcasts and presentations over the last few months. I have been impressed with their management team thus far. There are a few key areas of business that I think a management team has to demonstrate expertise in to build a long term winning biotech company.
Clinical Development:
They need expertise at advancing drugs through the clinical development process. So far, the company has advanced two programs through the end of phase 2 with MASH and Obesity. That shows they have some ability to move through clinical development but still have a way to go before reaching successful approval. They should be starting a phase 3 soon for the subcutaneous injection in obesity in Q2 of 2025. The oral phase 2 study should start in second half of 2025.
Regulatory Development:
They need expertise at navigating the regulatory process with the FDA. So far, they haven't had to deal much with the FDA. They are just starting phase 3. It will take some time before they get to that point. We will have to wait and see how it goes.
Managing Balance Sheet:
They need expertise at managing the balance sheet. They have $853 million in cash and no debt. They burned about $52 million in their Q1 quarter. Their costs will ramp as they advance into phase 3. They just signed a deal for manufacturing which included $150 million over the next 3 years. They also started a buyback for $250 million. I don't think that is a wise choice when they need cash to run phase 3 trials and build a commercial sales team. I am watching their cash flow statements, and I have not seen any buying of their stock yet. I think they know better.
Commercial Sales:
The final key expertise for a management team is the ability to build a successful commercial sales team. So far, they have no commercial products, and they are still quite a way from being commercial. We will have to see if they decide to partner or go it alone with commercial sales.
Future Potential:
VK2735:
Mechanism of Action:
This is novel dual agonist of the glucagon-like peptide 1, or GLP-1, and glucose-dependent insulinotropic polypeptide, or GIP, receptors. It is being developed in both oral and subcutaneous formulations for the potential treatment of obesity.
Obesity Data:
The Venture study was a phase 2 study for VK2735 subcutaneous injection vs placebo for 13 weeks. It was once weekly injections for obese patient greater than 30 BMI or overweight with greater than 27 BMI. The placebo adjusted weight loss over 13 weeks was 13.1%. Up to 88% of patients on VK2735 had at least a 10% weight reduction versus only 4% on placebo. Next steps are the planning of the phase 3 study for subcutaneous formulation in 2025.
The phase 1 study for the Oral formulation finished up in 2024. This was a safety and efficacy study for 28 days for the oral dosing. Weight reductions were seen reaching up to 5.3% over the 28 days. This compares with the 6% shown in the 28 day study of the subcutaneous formulation. They just started the phase 2 study of the oral formulation in early 2025.
The phase 3 trial is ramping up to start and should be started by the end of Q2 of 2025.
The phase 2 Venture study for Oral formulation is fully enrolled and should read out data in second half of 2025.
Obesity Competitive Landscape:
The competitive landscape for Obesity is intense. There are two major big pharma players with Novo Nordisk and Lilly. Then there are a dozen or so other companies competing to get a slice of the market. The move is away from injectables and toward oral formulations. So far, Viking has one of the best oral data sets.
Obesity Market Size:
There are over 100 million Americans living with Obesity which is nearly half of the adult population. This market is expected to grow to over $100 billion sales by 2030. There is a lot of room for competition as the biggest limiting factor for proteins is manufacturing. Viking singed a manufacturing deal for $1 billion oral doses which comes out to about 2.74 million patients treated with a once daily dose per year. That would support about $5.4 billion in sales.
VK2809:
Mechanism of Action:
This drug is designed to be an agonist of the Thyroid Hormone Receptor Beta (TRB) that possesses selectivity for liver tissue, as well as the beta receptor subtype, suggesting promise for the treatment of metabolic disorders, including Metabolic dysfunction Alcoholic Steatohepatitis(MASH) and Non-Alcoholic Steatohepatitis (NASH).
MASH Data:
The Voyage study was a phase 2 study of VK2809 in NASH/MASH with fibrosis stages F1 to F3. The primary endpoint was change in liver fat assessed by MRI. The study was a measure from baseline to 12 weeks with biopsies at 52 weeks of treatment. The data showed that up to 75% of patients had MASH/NASH resolution compared to 29% on placebo. They also showed that 57% of patients had greater than 1 stage improvement in their fibrosis.
MASH Competitive Landscape:
This drug will compete with Madrigal's drug which has the same mechanism of action and is already on the market. The data support Viking with the better in class data. That should give them a strong competitive edge.
MASH Market Size:
There are estimated to be around 315,000 patients which would be the population for this drug. With a comparable cost to Rezdiffra, they could do at least $1 billion in sales and maybe two or three times that amount depending on competition and pricing. I am currently using $1 billion in my estimates for now.
Over the weekend, I spent a ton of time picking through the $NBI and $ARKG looking for ideas. I shared my comments on many, but not all the companies I looked at. Here is a list of links to those threads.
They have 35 holdings in the $ARKG and I am going to look at them all and give you my opinion.
$TWST is a DNA company that makes and sell DNA sequences to biotech companies. I don't see them becoming a very huge company. I think the potential is actually small. One of the reasons I sold them when I really got to know the company.
$RXRX I owned for a few years but recently sold them as I felt the company had a few issues that needed to be fixed like sticking with a failed drug, not allowing analysts to ask tough questions, and the constant insider selling. I would rather wait for them to prove me wrong before I risk my money as I got too many other good ideas.
There was a lot of hype over the FDA announcement for replacing animal testing with AI modeling over time. A lot of the companies in the TechBio space rocketed higher yesterday. The market is not smart enough to know the winners and losers. It paints with a broad brush. My plan over the coming weeks it does dig into these TechBio companies. This has been a major theme of mine for years now. With all my study of the space, I will be able to help you sort the winners from the pack.
Here is the link to the FDA announcement where they are going to replace animal testing with alternatives over time. That is right. The huge pop in the TechBio names seems to be very premature. Nothing it going to change right away.
They are going to be replaced with AI based models of toxicology. This means the digital chemistry companies will be driving this technology both Big and Small. These will be companies like $SDGR, $RXRX, $TEM, $ABSI Insilico, GenerateBio, Asimov and Iambic
I know in a market that is super bubbly with the indexes trading at over 27x earnings many investors are wondering where to put their money. I know I have been looking and searching for value of any kind in this market.
1/ #Tech is a very big space, but there are some key themes here I am focused on as I think they are still innovative and disruptive. They are #Cloud, #Cybersecturity and #Automation.
2/ Automation is the easiest to cover first as it is all about replacing laborers in repetitive tasks with robots and equipping those robots with controller enabled with #AI and #ML to allow them to learn and improve the processes.