Investing successfully in biopharmaceutical companies can sometimes require complicated calculations worthy of Albert Einstein's brain. That's because picking the right ones involves a variation of the theory of relativity. And that's tied to the notion that the battle for sales is won not only in the marketing field, but also in who has the most promising clinical trial data. Differing forces can have a relative impact on which company succeeds.
As such, investors interested in Viking Therapeutics (VKTX 3.46%) need to monitor not only that company's weight loss drug development but also the development pipelines of rivals Novo Nordisk (NVO 1.97%) and Eli Lilly (LLY 3.10%). Effectively, all three things matter when it comes to the investment thesis for Viking. Here's why.
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The investment case for Viking Therapeutics
Starting with Viking, its key clinical program is VK2735, which Viking describes as "a novel dual agonist of the glucagon-like peptide 1 (GLP-1) and glucose-dependent insulinotropic polypeptide (GIP) receptors for the potential treatment of various metabolic disorders."
It's in clinical trials in both subcutaneous (injection under the skin) and oral forms. This is a key point to understand because an oral formulation has significant advantages over subcutaneously delivered medication, not least in terms of patient comfort and convenience.
- VK2735 (subcutaneous) is currently in a phase 3 trial, having produced excellent results in phase 2 last year, with 88% of patients treated with VK2375 achieving more than 10% weight loss compared to just 4% for the placebo group.
- VK2735 (oral) is in a phase 2 trial, with management anticipating reporting data from the trial in the second half of 2025.
Given that the phase 3 (subcutaneous) trial, which started in June, is a 78-week study, it could be 2027 before results are reported. The real needle mover (pun intended) will be the results of the phase 2 oral trial in 2025. It's easy to assume that the oral trial results will be positive based on the phase 2 subcutaneous results. Still, clinical trials don't always follow suit between the same drug and formulation between phase 2 and phase 3, let alone in this scenario.
On a more positive note, it's reasonable to argue that if the oral trial phase 2 is successful, then history suggests a major pharmaceutical company is likely to look closely at acquiring Viking.
Novo Nordisk and oral Wegovy
The weight loss field is, understandably, crowded, given its lucrative nature; the two leading players are Novo Nordisk with Wegovy and Eli Lilly with Zepbound. Both companies are developing oral formulations of weight loss drugs, with Novo Nordisk electing for an oral version of Wegovy. In contrast, Eli Lilly is developing another GLP-1 receptor agonist, Orforglipron.
Focusing on Novo Nordisk, after a successful phase 3 trial, the Food and Drug Administration (FDA) accepted Novo Nordisk's submission of the oral formulation of Wegovy (which demonstrated similar weight loss as subcutaneous Wegovy), and a decision is expected in the fourth quarter of 2025.
Viking investors should be cautious, as the oral formulation of Wegovy could win out over VK2735 if it succeeds and gets approved this year.
Eli Lilly and Orforglipron
Eli Lilly didn't opt for an oral formulation of Zepbound because it's not suited for oral delivery, and instead is developing the small molecule drug Orforglipron. It too has had a successful phase 3 trial, achieving a mean 12.4% weight loss at the highest dosage of 36mg over 72 weeks. Eli Lilly is hoping to submit it to the FDA before the end of the year. Again, something to look out for.
Where next for Viking Therapeutics
By the end of the year, Viking's phase data for VK2735 (oral) should be out, and a decision on Novo Nordisk's oral Wegovy should be made, too, while Eli Lilly should submit Orforglipron to the FDA. These timelines create an opportunity for Viking to get its phase 2 data out first, and then it remains to be seen if the company will be a takeover target or not. Much will depend on how successful Novo Nordisk is with its oral formulation, and in turn, Eli Lilly with its. When it comes to which will be the best investment, it's somewhat relative to which one manages the best results and gets them out first. Either way, it's something to watch for.
