Viking Therapeutics’ stock more than doubles as investors cheer cheap entry to weight-loss-drug craze

Maxim analysts raised their price target to $120 from $50 previously on the news.

The trial met all primary and secondary endpoints, showing statistically significant reductions in body weight at all doses compared with placebo, the company said.

Patients receiving weekly doses of the drug subcutaneously lost up to 14.7% of their body weight from baseline after 13 weeks. The treatment was safe and well-tolerated with 95% of adverse events that were mostly gastrointestinal deemed mild or moderate. Most adverse events occurred early in the trial and patients recovered quickly.

“Up to 88% of patients in VK2735 treatment groups achieved >=10% weight loss, compared with 4% for placebo,” Viking said in a statement.

Viking is planning to meet with the Food and Drug Administration to discuss next steps and hosted a conference call at 8 a.m. Eastern Time with further details.

Also read: Eli Lilly launches home delivery of obesity drug Zepbound — but warns against its use for cosmetic weight loss.

The news cheered investors looking for a cheaper entry to the weight-loss drug trend than offered by the two leaders in the field, Eli Lilly & Co. Inc.
LLY,
-0.11%
and Denmark’s Novo Nordisk.
NVO,
-0.80%

NOVO.B,
-1.21%

Viking’s stock is now trading at $74.34, after closing Monday just above $38. Eli Lilly is trading above $764, while Novo Nordisk’s ADR is above $121.

Viking’s stock cannot yet be evaluated by traditional forward price-to-earnings or price-to-sales ratios. Consensus estimates among analysts polled by FactSet were negative through 2026, before the market open on Tuesday. Consensus sales estimates for Viking through 2026 were zero for 2024, $1 million for 2025 and $58 million for 2026.

Ten analysts working for brokerage firms polled by FactSet cover Viking and all have buy ratings on the stock. The estimates may be changed significantly over coming days to reflect Tuesday’s news.

Based on Monday’s closing prices, the forward price-to-earnings ratio for Eli Lilly was 57.7. The forward P/E for Novo Nordisk’s Class B American depositary receipts was 35.7.

By comparison, weighted forward P/E ratios were 20.6 for the S&P 500, 19.6 for the S&P 500 healthcare sector, 17.4 for the S&P 500 biotechnology sector industry group and 19.5 for the S&P 500 pharmaceutical industry group, according to FactSet.

William Blair said the data shows that VK2735 outperformed even the highest expectations.

“It is our view that the magnitude of placebo-adjusted weight-loss of 13.1%, at the highest 15 mg dose, reflects a best-in-class profile among approved and investigational agents with Phase II data,” analysts Andy Hsieh and Alexandra Ramsey wrote in a note to clients.

The note acknowledged that there are limits on comparing across trials, but Lilly’s Zepbound showed a roughly 8% placebo-adjusted weight loss over 12 weeks.

“While we eagerly await full data that will be presented at a future conference (likely American Diabetes Association conference, June 21-24), we are shifting our stance to believe VK2735 has the potential to exhibit a potentially better efficacy profile relative to Zepbound (previously, our base case was that they are clinically equivalent),” they wrote.

Viking’s injectable and oral treatments use the same mechanism as Novo Nordisk’s Wegovy and Ozempic and Lilly’s Mounjaro, mimicking the effects of GLP-1, a gut hormone that can help control blood-sugar levels and reduce appetite. GLP stands for glucagon-like peptide.

The Phase 2 trial involved 176 adults who are obese or overweight, with at least one weight-related comorbid condition. That was increased from an original plan to enroll just 125 patients, due to heightened clinician and patient interests, Chief Executive Brian Lian told analysts on the call.

Statistically significant differences compared with placebo were maintained through the course of the study and weight loss appeared to be progressive and did not show evidence of plateauing, he said.

The company is still expecting data from the trial of an oral version of VK2735 later this quarter, said Lian. Analysts are excited about a pill version of the drug, which would be far easier for patients to manage than the current injectable versions.

Read also: Eli Lilly’s quarterly results top estimates as obesity, diabetes drugs gain insurance coverage

Viking is also developing a treatment for NASH, or nonalcoholic steatohepatitis. NASH is a more severe version of nonalcoholic fatty liver disease, or NAFLD, a range of conditions that occurs when excess fat builds up in liver cells.

NASH is the main reason that patients require liver transplants and there are high hopes for the therapies currently in development.

Lian said the mechanism behind VK2735 “seems to be applicable” for use in NASH, and that may be an additional indication for the treatment.

“I think for now we’re going to direct our resources into obesity, but that would be one obvious indication that could see some some some benefit from the mechanism,” he told analysts, according to a FactSet transcript.

 For more, see: Inside the NASH drug boom: New drugs for a ‘silent’ liver disease that affects millions near FDA approval

The stock has gained 562% in the last 12 months, while the S&P 500
SPX,
+0.10%
has gained 27%.

The high forward P/E ratios for Elli Lilly and Novo Nordisk reflect analysts’ expectations for continued rapid increases in the companies’ sales and earnings. Here’s a comparison of expected compound annual growth rates (CAGR) for the companies, the S&P 500 and three industry groups through 2025:

Additional reporting by Philip van Doorn.