Shares of Viking Therapeutics, a San Diego-based clinical-stage biopharmaceutical company headquartered in San Diego, United States, rose as much as 38.7% to its best performance in five months on Thursday, July 25, and rose about 33% in late trading to a two-month high since May 20.
At the same time, the "weight loss drug duo" Eli Lilly of United States and Novo Nordisk of Denmark both fell. Eli Lilly fell as deep as 6.3% before falling more than 5% to its lowest level since late May, and its market value has shrunk by more than $120 billion from its all-time high on July 15. Novo Nordisk's U.S. stocks fell 2.5% after falling 4%, and its European stocks closed down 2.3% after falling 3.5%, both hitting their lowest levels in two and a half months since May 8.
This is mainly due to the accelerated development of VK2735, a weight loss drug injection announced by Viking Therapeutics, and the decision to advance it to the third and final clinical trial stage after receiving a written response from the United States Food and Drug Administration (FDA).
Earlier, the company had been more conservative in saying it was preparing to launch another phase two, or mid-phase, study, called "Phase 2b," after positive results from a phase 2 trial at the end of February.
Justin Zelin, an analyst at agency BTIG, noted that the decision to advance to phase 3 clinical trials could shorten the development time of Viking Therapeutics' injectable weight loss drug by a year, after the market consensus estimate was that the drug would be available in 2029.
In other words, the drug substitutes that can directly compete with Novo Nordisk's weight loss "miracle drug" Ozempic and Wegovy, as well as Eli Lilly's same "miracle drug" Zepbound, are one step closer to being officially launched.
What's more, Viking Therapeutics' new drug plan to adjust the dosing burden to monthly injections, becoming the first company in the weight loss drug space to do so, will be more attractive than the current once-a-week injections of the "weight loss duo".
Naz Rahman, an analyst at Maxim Group, said VK2735 could be a best-in-class injection, a more convenient option for monthly injections, or a major competitive advantage, as patients are known to not be able to perfectly adhere to weekly treatments.
In fact, Viking Therapeutics reported its second-quarter earnings report after hours on Wednesday, which has sent its shares up 10%, laying a good foundation for Thursday's stock price surge. Although the company did not have any revenue in the second quarter and a net loss of $22.3 million was also higher than the loss of $19.2 million in the same period last year, EPS was a loss of 20 cents per share, better than Wall Street's expectation of a loss of 27 cents per share.
Dr. Brian Lian, the company's chief executive officer, said the Phase 2 VENTURE study of VK2735 for the treatment of obesity showed that patients lost about 15% of their body weight after 13 weeks of taking the drug and that it was safe and well tolerated. Prior to advancing the Phase 3 clinical trial of the drug, a Phase 2 study closing meeting will be held with the FDA in the fourth quarter of this year to discuss the design and timing of the Phase 3 trial.
He also mentioned another important piece of information that the oral version of VK2735 has also "shown encouraging safety and tolerability, as well as positive signs of clinical activity" in the Phase 1 study, and that the Phase 2 trial will be initiated in the fourth quarter of this year, "with subjects reporting a 5.3% reduction in average body weight from baseline after 28 days of daily oral administration, with dose escalation continuing." ”
VK2735 has a similar mechanism of action to Eli Lilly and other "miracle drugs for weight loss", both of which use a new dual agonist of glucagon-like peptide 1 (GLP-1) and glucose-dependent insulin secretotropic polypeptide (GIP) receptor to treat metabolic diseases such as diabetes, and produce gratifying weight loss effects by improving satiety and blood sugar indicators. Analysts such as Morgan Stanley predict that the global market for drugs known as GLP-1 treatments could reach $150 billion by 2030.
According to some analysts, the news that Viking Therapeutics is accelerating the development of weight loss drug injections has hit the stock prices of rivals Eli Lilly and Novo Nordisk, on the one hand, because Viking's drug is developing both injectable and oral versions, and the injection is more convenient to administer, and it is closer to "launching a drug that may be a sensation". At the same time, Eli Lilly and Novo Nordisk are facing a shortage of supply for weight loss miracle drugs, "which means that competitors have room to maneuver to enter the market." ”
Analysts are bullish on the prospects for a Phase 3 clinical trial of VK2735, with investment bank William Blair expecting the Phase 3 trial to begin in early 2025, with an impressive pace of progress three years after the drug's Phase 1 trial. In addition, there is also optimism about Viking Therapeutics' other promising drug candidates, notably VK2809 for nonalcoholic steatohepatitis (NASH).
And the competition in the oral weight loss drug market where Viking Therapeutics is located is also heating up. Pfizer recently announced plans to conduct further testing of its daily weight loss drug, danuglipron. Switzerland's Roche said earlier this month that patients who used its oral weight loss drug CT-996 lost 6.1 percent more weight in one month than those who took a placebo.
In addition, some analysts have found that several latest news in the field of weight loss drugs have had the greatest impact on Eli Lilly's stock price. Over the past eight trading days, the stock has fallen 14%, its worst eight-day performance since 2020:
In the past week, new news about weight loss drugs released by Viking Therapeutics and Roche Holdings triggered a sell-off in Eli Lilly shares. The plunge suggests that Eli Lilly and Novo Nordisk's dominance in the weight loss drug market could come to an end as rival alternatives move closer to launch. Jared Holz, a medical expert at Mizuho, said that the field of weight loss drugs will not always present a situation of "two dominance".
On Wednesday, Switzerland pharmaceutical giant Roche jumped 6% after it announced that its second weight-loss drug candidate from its acquisition company Carmot Therapeutics had shown positive results in early trials. The shares of the weight loss "duo" Novo Nordisk and Eli Lilly fell 3.77% and 2.7%, respectively.
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