Viking Therapeutics Sees Major Stock Decline Following Trial Outcome

Viking Therapeutics has experienced a significant drop in its stock value, tumbling over 30% during premarket trading on Tuesday following the release of underwhelming trial data for its obesity medication.

These results present a setback for Viking, as pharmaceutical firms are increasingly competing in the lucrative arena of weight-loss and diabetes treatments. The findings may bolster the stronghold of established players like Eli Lilly and Novo Nordisk, who are advancing medications that may enter the market well before Viking's tablet, VK2735.

Jared Holz, an equity strategist with Mizuho, remarked via email that the data 'likely dims expectations for Viking to assert itself as a major contender in the oral obesity treatment segment in the short to medium term.'

Developing a more user-friendly obesity pill presents ongoing challenges as companies, including rivals, have had to abandon earlier candidates and inaugurate new prospects.

Despite this, Viking's trials demonstrated a weight reduction of up to 12.2% over approximately three months, with the company noting that the weight loss wasn't levelling off, indicating potential for greater reduction in extended studies.

It remains challenging to directly juxtapose Viking's phase two trial with the outcomes of other oral drugs farther along in development, like those spearheaded by Eli Lilly and Novo Nordisk.

Holz commented that Viking's data appears 'inferior across almost all metrics' in comparison to Eli Lilly's solution, which in a phase three trial over 72 weeks, led to an average weight loss of 12.4% in patients, or 11.2% when factoring in all attritions.

During Viking's 13-week trial, a noticeable 28% of participants withdrew, whereas Eli Lilly encountered a quarter dropout rate over 72 weeks. This, Holz notes, makes Eli Lilly's drug 'look far superior when compared directly.'

Gastrointestinal issues, mostly mild to moderate, were the primary reasons for discontinuation in Viking's study; nausea affected 58% of Viking's participants and vomiting was reported by 26%, as opposed to the placebo group with 48% and 10%, respectively.

These adverse effects were noted to be more frequent over a short-term trial period than those documented in studies of Eli Lilly's alternative and Novo Nordisk’s oral formulation of Wegovy.

The action mechanism behind Viking's treatment targets two gut hormones, GLP-1 and GIP, which reduce appetite and potentially enhance sugar and fat metabolism.

Meanwhile, both Eli Lilly's and Novo Nordisk’s oral medications focus on the GLP-1 hormone, though the latter entails certain dietary limitations.