Vivani Medical (VANI) stock price surged: is it a good buy?

Vivani Medical (NASDAQ: VANI) stock price surged hard this week after the company published positive results of its ongoing weight loss drug trial. The shares surged from about $1 and reached a high of $7.81. It then ended the session at $3.74, which was still 275% above its close on Tuesday.

Vivani Medical’s surge brought its total market cap to more than $200 million. The reason for this increase was that the company released positive results for its weight loss implant, which showed strong results in animal testing. 

The twice-yearly implant will help patients deal with their weight loss without the need for taking pills and injections. In its statement, the management said that its trial produced weight loss of about 20%, higher than that of popular drugs like Ozempic and Wegovy. 

As a result, if the implant is successful, Vivani Medical hopes that it will become a better alternative to the popular drugs of the day. For one, the weight loss industry is a big one considering that a big population is now obese. In a statement, the CEO said:

“We believe the primary expected advantages of our proprietary NanoPortal™ implant technology, improving medication adherence and medication tolerability, have the potential to transform and advance the adoption of GLP-1 therapy in the future.”

Analysts believe that biotech companies that create these drugs with positive results will most likely be acquired. Besides, all pharmaceutical companies have seen the strong performance of the likes of Novo Nordisk and Eli Lilly. Novo is now a bigger company than the entire GDP of Denmark, its home country.

The challenge for these biotech companies is that the industry is getting saturated, as I wrote on Wednesday. Some of the top biotech companies that are building these solutions are Iovance and Viking Therapeutics. It is estimated that tens of companies are creating these medicines.

The other issue for Vivani Medical is that it will still take time before the implant moves from concept to reality. It needs months or years of testing.

Even when the drug is approved, the reality is that Wegovy and Ozempic are simply far ahead of the curve in the industry. They have become verbs in the weight loss drug industry.

The other challenge, and this is purely speculative, is that Vivani Medical could use the surge in its stock to dilute its shareholders by raising capital. Therefore, the bottonline is that investors should be cautious when buying the VANI stock.