Viking Therapeutics (NASDAQ: VKTX) saw its stock plunge sharply following the release of Phase 2 trial results for its obesity treatment, signaling growing concerns among investors about the drug’s future in a competitive market dominated by established players. Yesterday Viking’s shares tumbled more than 42% amid heavy trading volume, reflecting investors’ disappointment despite some weight loss benefits demonstrated by the oral medication VK2735. The stock partially recovered today with a modest 6% gain but remains under pressure due to the trial’s mixed outcome.
The trial, conducted on 280 adults with obesity or overweight conditions, showed that patients taking VK2735 daily for 13 weeks lost an average of 12.2% of their body weight, approximately 26.6 pounds. This outcome was statistically significant and shows promise, aligning the drug’s efficacy close to competitors’ offerings, such as Eli Lilly’s orforglipron. However, the placebo group’s weight loss was minimal at just 1.3%, or about 2.9 pounds, creating a clear distinction in effectiveness.
Where the study faltered, and what sparked investor backlash, was the high dropout rate and safety concerns. Nearly 38% of participants at the highest 120 mg dose discontinued the treatment mainly due to gastrointestinal side effects like nausea and vomiting. About 58% of those receiving VK2735 experienced nausea compared to 48% in the placebo group, with 25% reporting vomiting episodes. Though most adverse events were reported as mild or moderate, the high rate of treatment discontinuation signals tolerability issues that could limit the drug’s real-world use.
This contrasts sharply with the expectations of a “cleaner” safety profile from a pill meant to compete against injectable weight-loss medications. The oral route had initially raised hopes for broader patient acceptance, but the dropout figures have raised doubts about VK2735’s ability to match the success of market leaders like Novo Nordisk and Eli Lilly, whose injectable products have demonstrated robust efficacy and lower discontinuation rates over longer trials. Novo Nordisk reported weight loss of up to 15.1% after 68 weeks with oral semaglutide, while Eli Lilly’s orforglipron showed a 12.4% reduction after 72 weeks, both supported by more favorable adherence rates.
Investor unease was reflected in Viking’s stock, which dropped from $42.09 at Monday’s close to about $25.99 at Tuesday’s opening bell, wiping roughly $1.3 billion off its market capitalization. This steep decline also benefited short sellers, who profited significantly from the share price tumble, reporting paper gains estimated at $521 million in just one day.
From an industry perspective, the results reinforce the supremacy of Eli Lilly and Novo Nordisk in the obesity treatment market. Both firms have advanced clinical pipelines and are closer to regulatory approvals for their weight-loss drugs, solidifying their competitive lead. Viking had been considered a potential acquisition target due to its promising development programs, but these trial outcomes may dampen such prospects in the near term.
Viking’s CEO Brian Lian maintained a cautiously optimistic tone, highlighting that the weight loss curves seemed progressive, hinting at potential further gains with longer dosing periods. He also noted that gastrointestinal adverse events tended to occur early in treatment and might resolve with continued use. The company sees opportunity in a maintenance strategy using lower doses to improve tolerability, leaving room for ongoing study and development.
Nevertheless, the market’s reaction suggests investors are prioritizing safety and long-term adherence, especially given the alternatives available. With the obesity drug market set to grow rapidly, patient compliance will be crucial for any new therapy’s commercial success. While VK2735’s oral formulation shows pharmacological promise, these tolerability concerns place it at a disadvantage compared with the injectable therapies already making headway.
