Viking's stock pops as obesity-drug contender drags down Eli Lilly, Novo Nordisk
By Eleanor Laise
Experimental drug will move to late-stage trials, accelerating development timeline
Viking Therapeutics Inc. shares jumped 38% on Thursday after the company signaled progress on an experimental obesity drug that could accelerate its development timeline.
The San Diego-based company (VKTX) said late Wednesday that it would advance an injectable version of its investigational treatment, VK2735, directly to Phase 3 trials. Like Eli Lilly & Co.'s weight-loss drug Zepbound, VK2735 acts on two different gut hormones, GLP-1 and GIP.
Viking has developed the drug at a "torrid pace," William Blair analyst Andy Hsieh wrote in a research note Wednesday, adding that he believes the value of the treatment will "ultimately be maximized in the hands of a big pharma" company.
The news weighed on shares of the obesity-drug leaders Thursday. Eli Lilly's stock (LLY) fell more than 3%, while Novo Nordisk's American depositary receipts (NVO) dropped nearly 2%.
In a Phase 2 study, patients taking VK2735 lost an average of about 15% of body weight after 13 weeks. Viking is also working on a tablet version of the drug, which is set to enter Phase 2 trials later this year, the company said.
The drug may also have a clear differentiator from the wildly popular treatments already on the market. Viking plans to explore monthly dosing of VK2735, CEO Brian Lian said on a call with analysts Wednesday. That approach "could offer additional real-world treatment flexibility which builds on the company's competitive advantage in developing both subcutaneous and oral formulations of the same compound," Leerink Partners analysts said in a research note Wednesday.
Both Novo Nordisk's Wegovy and Lilly's Zepbound are once-weekly injections. Patients often don't adhere to weekly dosing, so a once-monthly option "may be a highly attractive proposition," Maxim Group analysts said in a report Thursday.
Viking on Wednesday reported a second-quarter net loss of $22.25 million, or 20 cents per share, versus a loss of $19.23 million, or 19 cents per share, a year earlier.
The company had about $942 million in cash at the end of the second quarter - a position that could sustain operations well beyond three years, William Blair's Hsieh said in the report Wednesday.
Viking's stock has climbed more than 270% in the year to date, while the S&P 500 SPX has gained 14.2%.
-Eleanor Laise
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07-25-24 1204ET
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