Viking Therapeutics (VKTX) experienced a significant share price decline after mid-stage clinical trial results for its oral weight loss drug candidate, VK2735, raised investor concerns regarding tolerability and comparative efficacy in the competitive obesity market.

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Viking Therapeutics (VKTX) shares experienced a substantial decline, falling approximately 34% following the release of mid-stage clinical trial data for its oral obesity drug candidate, VK2735. The market's reaction reflects investor concerns over the drug's tolerability and its competitive positioning within the rapidly expanding weight loss drug market, which is currently dominated by pharmaceutical giants Eli Lilly (LLY) and Novo Nordisk (NVO).

The Event in Detail

Viking Therapeutics announced results from its Phase 2 VENTURE-Oral Dosing trial for VK2735. The data indicated that patients receiving the highest dose achieved an average of 12.2% weight loss from baseline at three months. While the drug successfully met its primary and secondary endpoints, investor focus quickly shifted to secondary concerns regarding its tolerability and comparative efficacy against existing and pipeline treatments from larger competitors. A key point of contention was the reported discontinuation rate of approximately 28% among patients in the trial, largely attributed to gastrointestinal side effects such as nausea and vomiting. This figure contrasted unfavorably with lower discontinuation rates observed in trials for rival oral obesity drugs.

Analysis of Market Reaction

The sharp decline in Viking Therapeutics stock was primarily driven by investor apprehension surrounding the tolerability profile of oral VK2735 and its implications for future market penetration. Despite the drug demonstrating a statistically significant weight reduction, the high discontinuation rate raised questions about patient adherence and the overall commercial viability in a market where established players offer therapies with more favorable side effect profiles. Analysts pointed to comparisons with Eli Lilly's oral drug, orforglipron, which showed similar weight loss with a lower dropout rate over a longer period. The market reaction appears to be a "sell the news" event, as investors reassessed their expectations for VKTX's ability to carve out a significant share in the oral obesity market.

Jared Holz, a healthcare equity strategist at Mizuho, articulated the market sentiment, stating:

“Data look inferior to LLY on almost all metrics, and the thing to consider here is that patients discontinued at such a high rate over 13 weeks vs. LLY in the mid-20% range—but over 72 weeks.” He added that the readout “probably shutters hope for VKTX as a big-time player in the oral obesity market over the near to medium term.”

Broader Context and Implications

The weight loss drug market is experiencing unprecedented growth, projected to expand from an estimated $28 billion to $95 billion or even $100 billion by the early 2030s. This lucrative market is currently led by Eli Lilly with Mounjaro and Zepbound, and Novo Nordisk with Ozempic and Wegovy. Viking Therapeutics, with a market capitalization of approximately $3 billion, aims to compete in this space. It is developing both injectable and oral formulations of VK2735. Prior to this oral data, the injectable version of VK2735 had shown promising results in Phase 2 trials, leading to a significant surge in Viking's stock price earlier in the year and has since advanced to Phase 3 clinical development.

Financially, Viking Therapeutics maintains a strong cash position, reporting approximately $808 million at the close of the second quarter of 2025. This provides a substantial financial runway to support the ongoing advancement of VK2735 through its later-stage clinical trials. While the recent decline has impacted VKTX's valuation, with its price-to-book ratio at 3.82 times compared to the industry average of 3.09 times, analysts largely maintain a bullish long-term outlook for the company, citing the immense potential of the obesity market and Viking's broader pipeline.

Looking Ahead

Despite the recent setback with the oral VK2735 data, Viking Therapeutics has stated that the pace of weight loss observed in the trial suggests that adjustments to dosing parameters, such as lower doses and longer treatment periods, could potentially yield more compelling results and improve the drug's tolerability. The company is actively progressing with its Phase 3 VANQUISH clinical program for the injectable formulation of VK2735, with results not anticipated until late 2026 or early 2027. This injectable form has previously demonstrated strong efficacy and a more favorable safety profile.

Analyst sentiment, while acknowledging the immediate challenges, points to continued optimism. Edmund Ingham, SA Investing Group Leader for Haggerston BioHealth, noted:

"despite being underwhelming compared to Novo and Lilly's oral GLP-1 drugs, VK2735 remains a top-three candidate in a massive, rapidly growing obesity market."

Wall Street analysts, based on an analysis of 24 experts, maintain a "Strong Buy" consensus rating for VKTX, with a median price target suggesting a significant upside potential from current levels. The future performance of Viking Therapeutics will largely hinge on the successful progression and favorable outcomes of its ongoing Phase 3 trials for the injectable VK2735 and any subsequent refinements to the oral formulation to address tolerability concerns.