If you're looking for the company-specific headline that sent shares of Viking Therapeutics (VKTX 1.37%) soaring today, don't bother. You won't find one. Rather, investors are proverbially connecting dots based on other pharmaceutical companies' headlines. In this instance, what's bad for (much-bigger) Novo Nordisk (NVO 1.82%) is good for Viking.
One less future competitor
Getting straight to the point, Novo Nordisk's injectable weight-loss drug CagriSema is good, but not better than Eli Lilly's (LLY 2.31%) tirzepatide when administered the same way for the same length of time. Specifically, whereas patients receiving subcutaneous injections of Lilly's tirzepatide lost an average of 25.5% of their body weight over 84 weeks, CagriSema users only lost an average of 23%.
To win the FDA's approval, a new treatment must be at least as effective as an alternative that's already on the market, or offer some other discernible benefit like better patient tolerability.
Image source: Getty Images.
But what does this have to do with Viking Therapeutics? Although it's a different formulation, Viking's VK2735 currently in phase 3 trials is also a subcutaneously administered drug leveraging the same GLP-1 (glucagon-like peptide 1) weight-loss pathway that Lilly's tirzepatide injection and Novo's CagriSema are designed to leverage. If Novo Nordisk is unable to win approval for this injectable version of CagriSema, it means one less future competitor to Viking Therapeutics' VK2735 (assuming it's approved). That's why as of 12:41 p.m. ET today VKTX shares are up 9.6%.
Undoubtedly good news, even if it doesn't matter just yet
It's not an outrageous investor response either.
NASDAQ: VKTX
Key Data Points
Although the weight-loss drug industry is largely dominated by Eli Lilly and Novo Nordisk right now -- both of which already have obesity treatments on the market -- as the business matures there's growing demand for more finely tuned choices like Viking's. Now it looks like there's going to be at least a little more room for these alternatives as well. To this end, it's worth noting that by some measures Viking's weight-loss drug showed superior efficacy in its phase 2 trials.
Or if nothing else, VK2735 is proving reasonably safe and well-tolerated compared to similar alternatives.
Just bear in mind that Viking's VK2735 isn't yet FDA-approved either, and though its results thus far have been encouraging, there's no guarantee it will be.
