A new player in weight-loss drugs has captured Wall Street's interest and could soon take on superstars Novo Nordisk and Eli Lilly. The rise of Viking Therapeutics also spells trouble for Pfizer stock as the pharma giant struggles to become relevant in the fast-growing drug market.
Viking, which launched in 2012, is a small biotech company with no sales yet. Viking Therapeutics stock has a market cap of roughly $7 billion. But its two-pronged approach to weight loss has taken Wall Street by storm.
Just three months ago, VKTX stock catapulted 28% in one day after Viking said it's exploring a monthly dose of its weight-loss shot, which would be more convenient than the weekly shots currently on the market. The news hammered shares of biopharma's old guard, including Pfizer stock as the 175-year-old drug giant plays catch-up in what's projected to be a $105 billion market by 2030. However, IBD stock data shows that Viking has work to do as the company gears up for battle with weight-loss drug leaders Eli Lilly and Novo Nordisk.
Still, capturing even a small piece of this market could be huge, says Viking Therapeutics Chief Executive Brian Lian.
"If you assume the market size is $100 billion, it's most likely larger," he told Investor's Business Daily. "Even 3% or 4% of that market — that's a bigger revenue driver than many pharma companies have in their entire pipeline. You don't need 40% market share. Viking wouldn't need that to be successful."
Pfizer Stock Slumps, Viking Therapeutic Stock Soars
The VKTX stock surge on news of Viking Therapeutics' plan for a monthly dose weight-loss drug shot underscored how it could become a major player in a market now dominated by Eli Lilly and Novo Nordisk.
But weight-loss drugs are a dynamic market, closely watched by Wall Street.
Shares of Big Pharma stocks AstraZeneca and Roche have risen on news of their efforts in obesity treatment. Amgen stock has trended higher since May as Wall Street watches for more details from its monthly weight-loss shot, which is still in testing.
Pfizer has been a laggard for years, but Pfizer shares rallied in July after the company announced it was moving forward with its daily weight-loss pill.
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Viking Therapeutics Eyes Massive Weight-Loss Drugs Market
The weight-loss drugs brawl now features injectable treatments from two of pharma's biggest names, Novo Nordisk and Lilly. Their drugs, Wegovy and Zepbound, respectively, brought in a combined $4.74 billion in 2023 sales. This year, they're expected to generate a combined $14.39 billion, according to FactSet.
By 2029, the latest year for which there are estimates, their sales could rocket to $40.6 billion.
So, it's easy to see why investors are closely watching next-generation efforts — especially the pivot to pills.
Could Weight-Loss Pills Replace Shots?
Oral medications are easier to store, while injectable drugs must be refrigerated. Unlike shots, pills don't require an autoinjector, syringe or pen. Further, Terns Pharmaceuticals Chief Executive Amy Burroughs says it's easier to titrate oral medications. This means slowly increasing the drug's dosage to offset side effects.
Oral weight-loss drugs also are easier to combine with other treatments.
Roche and AstraZeneca are using the latter strategy.
AstraZeneca's diabetes medicine Farxiga is well-known. The company also is working on a pill to lower LDL cholesterol. Ruud Dobber, executive vice president of biopharmaceuticals at AstraZeneca, imagines a world in which patients could take combination pills to simultaneously cut weight and treat diabetes, high cholesterol or other cardiovascular conditions. The approach features "very attractive combinations," Dobber told IBD.
On an even simpler level — that's also bullish for Pfizer stock and others — some people don't want to jab themselves once a week, Structure Therapeutics Chief Executive Raymond Stevens said in an interview.
"They want to pop the pill with their coffee and drive to work," he said. "They're not wanting needles."
Manufacturing Is Key For Weight-Loss Drugs
Manufacturing remains a concern, thanks to the drug/device combination required by injectable drugs. In fact, it has been a key sticking point for Wegovy and Zepbound. The Food and Drug Administration has, at times, listed semaglutide and tirzepatide injections — the chemical names of the two drugs — as being in shortage.
Eliminating the autoinjector, syringe or pen could remove a speed bump in the manufacturing process for weight-loss drugs, says Manu Chakravarthy, global head of cardiovascular, renal and metabolism product development for Roche's Genentech subsidiary.
"Our obligation is to really bring forward transformative medicines to the masses," he told IBD. "In our view, it cannot just be done with one or two agents — injectables or orals. We need a whole slew of them, especially when it comes to the type of scale we're talking about.
But despite the manufacturing woes of Wegovy and Zepbound, Structure Therapeutics' Stevens credits Novo's and Lilly's injectable drugs for opening up the market in weight-loss drugs. In 2023, the two companies "provided enough material for 5 million patients, combined," he said.
"We know in the U.S. the need for these drugs is in excess of 100 million," he said. That market is poised to grow dramatically, he added. "There will be 1.5 billion people by 2030 globally in need of metabolism medications."
Viking Therapeutics Stock Surges This Year
That massive need is partly why VKTX stock has shined lately.
Viking is a development-stage biotech company, meaning it has yet to offer commercial products. The company's lead drug is called VK2735. Like Eli Lilly's Zepbound, VK2735 mimics both the GLP-1 and the GIP hormones to stoke, potentially, greater weight loss than drugs like Novo's Wegovy. Wegovy targets only the GLP-1 hormone.
Viking has drawn attention for a unique, dual approach to obesity drugs. The company is testing oral and injectable forms of VK2735.
CEO Lian doesn't expect oral drugs to be a "game-changer" in the weight-loss drugs race. Instead, he expects patients who've lost weight with injections to switch to pills as a means of maintaining that weight loss.
"Anybody you know who has tried an injection has said that it's not a big deal," he said. "Orals will be an option for new patient starts. But it will be a smaller population because of this rapid expansion of injectables. ... It's an expansion (with orals) but it's incremental."
Lian said having both oral and injectable weight-loss options puts Viking Therapeutics in a unique position. Patients won't have to start on a Lilly or Novo shot and then switch to a pill from Pfizer, Roche or Structure. Instead, they can start on Viking's shot and then switch to the oral form of the same drug.
Viking Therapeutics stock has been on a roller coaster this year. On Feb. 27, shares skyrocketed 121% after Viking said its weight-loss shot prompted patients to lose 13.1% more weight over 13 weeks than the placebo group. The oral formulation of the same Viking drug helped patients lose 5.3% of their weight over 28 days.
Can Pfizer Stock Turn Around?
Viking's rise as a potential biotech powerhouse in the obesity drug race highlights a major industry narrative: the struggle of Pfizer.
The pharma giant founded in 1849 grabbed the global spotlight during the Covid crisis when, together with Moderna, it helped blaze the trail for much-needed vaccines.
But in the battle for dominance in weight-loss drugs, Pfizer has fallen behind faster-moving rivals. The company's weight-loss efforts have come in fits and starts, much to investors' chagrin.
Pfizer stock has dropped off markedly after hitting a record high near 62 in late 2021. Shares are now below 30 and have a poor IBD Relative Strength Rating of 27. This puts Pfizer stock in the bottom third of all stocks when it comes to 12-month performance. In comparison, Viking Therapeutics shares have a perfect RS Rating of 99.
Pfizer's Hefty Bet
Like other companies, Pfizer is making hefty bets on the oral weight-loss space. The company has scrapped two GLP-1-targeting drugs since mid-2023. That includes a twice-daily version of danuglipron after more than half the participants in a study dropped out due to side effects. Now, Pfizer believes its once-a-day version of danuglipron could hit the market second behind Lilly's orforglipron. Orforglipron also targets the GLP-1 hormone.
"You can bet that like every Pfizer program, it will be very fast," Pfizer Chief Scientific Officer Mikael Dolsten told analysts during the company's June-quarter earnings conference call.
Not everyone agrees. Evercore ISI analyst Umer Raffat says Pfizer is likely buying time to see the data from another oral GLP-1 drug in earlier testing. Leerink Partners analyst David Risinger says Pfizer probably won't have test results for danuglipron in patients with obesity until 2026.
Meanwhile, Pfizer has a third pill in testing with an undisclosed mechanism.
Viking Therapeutics Vs. Pharma's Old Guard
The quest for the best weight-loss drugs will undoubtedly continue.
Pfizer and Roche are testing oral drugs that target GLP-1 alone. Roche rattled Novo and Lilly stocks on July 17 when the company said its weight-loss drug helped patients lose 6.1% more body weight over a month than the placebo group. Pfizer stock rose nearly 2% that day, while shares of Viking Therapeutics slumped almost 13%.
Lilly's Zepbound and Viking's VK2735 work on the GLP-1 and GIP hormones. They work together to slow how fast the stomach empties itself and improve blood sugar markers.
Novo and Structure are testing drugs that target amylin. Combining those with a GLP-1 drug could lead to even greater weight loss. Last month, Novo Nordisk said its amylin-targeting drug outperformed Wegovy in a 12-week study. Terns is testing a drug that targets THR beta in the hopes of improving fat loss vs. muscle loss. But it's still early days for those efforts.
The myriad options could offer even more proof of the size of the space.
"I think you're going to see a lot of these uses tailored to a specific patient's profile," Viking Therapeutics CEO Lian said. "The amylin plus GLP-1 might be a little better in a diabetic person who is overweight. Glucagon, GLP-1 and GIP might be better in the non-diabetic population. Each combination will find its niche in the market depending on the individual profile."
Pfizer's Dolsten acknowledged the power behind combination agents. Some patients might only need a GLP-1 drug to lose 10% body weight and improve their metabolic health.
"Other patients may want to have more body weight loss and may need combo agents," he said. "And you really see that now from the peptide companies that they (have) single, double mechanism action."
Being A 'Me Too' In Weight-Loss Treatments
Finding new approaches beyond GLP-1 has proved to be tricky for drugmakers.
In late September, Novo Nordisk stock tumbled after the company said a pill it acquired along with startup Inversago Pharmaceuticals caused patients to experience neuropsychiatric side effects. Novo's pill blocks a cannabinoid receptor. This receptor helps regulate weight and energy balance.
Though patients lost roughly 16 pounds over 16 weeks at the lowest dose, they also reported mild to moderate anxiety, irritability and sleep disturbances. In addition, they faced the same gastrointestinal side effects that plague GLP-1 drugs. The results also hurt Corbus Pharmaceuticals, which is testing a drug that uses the same mechanism to treat obesity. Corbus stock crashed more than 62% on Sept. 20.
Novo plans to run a second study in 2025 seeking a better balance between safety and effectiveness.
Still, there is merit to finding something beyond GLP-1 to stoke weight loss, says Third Bridge analyst Lee Brown. He says companies will need to figure out how to differentiate their weight-loss drugs. This could be partly why Pfizer stock remains under pressure.
"If you're going to be a latecomer to the market, being a late me-too isn't the best strategy," he told IBD. "I do think the question is if you're a dual or a triple (agonist), but you're (a) weekly (shot), are you going to get pushed aside by an oral GLP that's a me-too? I would hope not, but this gets back to how we think about needles and how that's going to be impacted by supply and demand."
Viking Therapeutics Outperforms Lilly, Novo Nordisk, Pfizer Stock
The obesity drugs battle paints a stunning picture on Wall Street. IBD stock ratings and research tools show Viking stock outperforming Big Pharma's old guard. It's not even close.
Viking Therapeutics has a perfect Relative Strength Rating, while Pfizer stock ranks in the bottom one-third of all stocks in terms of 12-month performance. Novo and Lilly stocks are performing better, but still lag Viking. Novo ranks with a 27, while Eli Lilly has an 86.
The picture changes somewhat when considering the companies' IBD Composite Rating, which combines fundamental and technical performance factors. On a 1 to 99 scale, Eli Lilly tops the group with a 97 rating, followed by Novo Nordisk with 71, Viking with 55 and Pfizer stock with 41.
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Viking Therapeutics: High Expectations
In other words, Viking stock's performance on Wall Street has been impressive, based on high expectations of its obesity offerings. But it has yet to deliver on the fundamentals. While the 12-year-old company's shares are crushing Pfizer stock, Viking isn't expected to have any product sales until 2026 and analysts project adjusted losses until 2029.
On a technical basis, Viking Therapeutics stock is trading just above its 50-day and 200-day moving averages, though it remains below its record high at 99.41, achieved on Feb. 28, according to MarketSurge. Meanwhile, it faces two pharma powerhouses, Eli Lilly and Novo Nordisk, whose weight-loss treatments already dominate a rapidly growing market.
But Viking's Lian is confident. No one has successfully launched an obesity-treating pill yet. And the company is working hard on an injectable that could also take on the biggest names in weight-loss drugs.
"It's an exciting and dynamic space and we're positioned well," he said. "We're going to move as aggressively as possible."
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
