Viking Therapeutics Plummets 43% Despite Positive Obesity Drug Data
Impressive Phase 2 trial results for its oral weight-loss pill were not enough to satisfy high investor expectations, triggering a massive sell-off.
Shares of Viking Therapeutics (VKTX) collapsed on Tuesday, plummeting more than 43% in a classic 'sell the news' reaction after the company announced positive results from a mid-stage trial of its experimental oral drug for obesity.
The San Diego-based biotech firm reported that its Phase 2 VENTURE trial for the drug, VK2735, successfully met its primary and secondary endpoints. Patients taking the highest dose of the once-daily tablet showed a mean weight loss of up to 12.2%, or 26.6 pounds, after 13 weeks, compared to just 1.3% for those on a placebo. The company also highlighted that up to 80% of subjects receiving the treatment achieved at least 10% weight loss.
In a statement, Viking's chief executive, Brian Lian, Ph.D., called the results exciting. "As in prior studies we observed a clear dose response and impressive weight loss across the 13-week treatment period," he said. "The progressive nature of the weight loss curves suggests the potential for further improvement with longer dosing periods."
Despite the apparently strong clinical data, investors rushed for the exits. The stock plunged on staggering volume, trading at more than 10 times its daily average. The sharp downturn suggests that the market's lofty expectations for the drug, a potential competitor in the multi-billion dollar weight-loss market dominated by Eli Lilly and Novo Nordisk, were already priced into the stock, prompting traders to take profits once the official data was released.
The drug, VK2735, is a dual agonist that targets both the GLP-1 and GIP receptors, similar to Eli Lilly's successful drug, Zepbound. Viking's trial data indicated the oral tablet was generally safe and well-tolerated, with most gastrointestinal side effects, such as nausea, reported as mild or moderate.
The intense market reaction underscores the high-stakes nature of the obesity drug landscape. While Viking's results appear promising, they will be heavily scrutinized against data from established players and other clinical-stage competitors. The sell-off mirrors similar reactions seen with other companies in the sector, where impressive clinical results have sometimes failed to prevent a stock price drop amid intense investor focus on competitive positioning and market potential.
Viking is also developing an injectable version of VK2735, which is currently in more advanced Phase 3 trials. The company will now look toward advancing its oral formulation into late-stage studies, but Tuesday's market response serves as a stark reminder of the immense pressure to not just meet, but dramatically exceed, expectations in the lucrative weight-loss drug race.