Viking shares nosedive after disappointing weight loss pill trial results

A leading biopharmaceutical business saw its shares tumble by almost 40 per cent after results from a trial of its much-anticipated weight loss pill failed to meet market expectations. Viking Therapeutics, which is engaged in fierce competition with pharmaceutical giants such as Eli Lilly and Novo Nordisk to develop the next generation of oral obesity treatments, reported that its drug VK2735 led to a maximum weight loss of 12.2 per cent over 13 weeks on the highest tested dose.

Market analysts had anticipated the therapy would deliver average reductions in body weight of between 10 and 15 per cent. However, shares in the San Diego-based company slumped by more than a third in trading on the New York stock exchange, largely due to disappointing safety data and a high dropout rate. Results revealed that approximately 38 per cent of patients receiving the highest dose discontinued treatment before completion, most frequently due to gastrointestinal side effects.

Novo Nordisk and Eli Lilly have so far dominated the global market for obesity drugs with their injectable therapies Wegovy and Zepbound. Both firms, along with Viking Therapeutics, are racing to develop oral alternatives which are considered more convenient and therefore potentially lucrative. Recent figures put the estimated total value of the weight loss medications sector as high as $150 billion by decade’s end.

This year has seen confidence in the sector waver as both Eli Lilly and Viking have struggled to impress investors with their latest clinical data. Eli Lilly’s most recent oral drug trial saw participants lose on average 12.4 per cent of body weight, which sits at the lower end of market expectations, and was accompanied by a less favourable side effect profile than anticipated.

Novo Nordisk, meanwhile, has previously shown promising trial results for its own oral drug, with trial participants losing around 15 per cent of their body weight. The Danish firm has now submitted this drug for regulatory approval in the highly competitive US market. Ongoing industry turbulence has also been compounded by political threats to pharmaceutical prices and aggressive competition from US copycat products.

Brian Lian, chief executive of Viking, emphasised that the latest results still demonstrated a clear dose response and notable weight loss over the 13-week treatment, suggesting potential for further outcomes given longer dosing periods. By midday trading in New York, shares in Viking were down 42 per cent at $24.43, placing the company’s valuation at $2.8 billion.