An experimental weight-loss drug from Viking Therapeutics topped Eli Lilly's Zepbound in a midstage study Tuesday. Viking stock skyrocketed while Lilly shares edged lower.
Patients who received a weekly shot of Viking's drug, known as VK2735, lost up to 14.7% of their body weight over 13 weeks. That's 13.1% better than the placebo group. In comparison, Eli Lilly's Zepbound resulted in a 7% to 8% improvement over a placebo in the Phase 3 study, Surmount-1.
Investors expected just 8% placebo-adjusted weight loss for Viking's drug, Leerink Partners analyst Thomas Smith said in a report.
"Overall, we view the data as a clear win for Viking and expect significant strength in Viking shares," he said. "The greater than 13% placebo-adjusted weight reduction is highly meaningful, exceeding management's bar for success and investors' bar for success vs. competing agents."
On today's stock market, Viking stock soared 121% to 85.05. Eli Lilly stock, on the other hand, edged down 0.9% to 765.07, paring early losses. Novo Nordisk, which also sells a weight-loss drug, saw shares dip 1% to 122.20.
Viking Stock Was Already On A Run
The news is particularly troublesome for Eli Lilly whose Zepbound acts the same way as Viking's new weight-loss drug. Both mimic the activity of receptors called GLP-1 and GIP. This improves feelings of satiety and blood sugar markers, and slows how fast the stomach empties itself. Novo's Wegovy works on GLP-1 alone.
"We are shifting our stance to believe VK2735 has the potential to exhibit a potentially better (effectiveness) profile relative to Zepbound," William Blair analyst Andy Hsieh said in a note. "Previously, our base case was that they are clinically equivalent."
Hsieh eventually expects Viking to find a strategic Big Pharma partner to help navigate the rebate- and discount-driven reimbursement landscape. Ultimately, he calls for VK2735 to generate $14.4 billion in U.S. sales and $7.2 billion in Europe. That's up from his previous estimate for $10.1 billion and $3.6 billion, respectively. He has an outperform rating on Viking stock.
A partner would help Viking, which doesn't yet have a drug on the market, compete against the weight-loss behemoths, Lilly and Novo. But Leerink Partners analyst David Risinger notes two caveats. Viking's study was Phase 2, while Lilly's was Phase 3. It's hard to compare drugs across studies, but there will be a more apples to apples comparison when VK2735 hits Phase 3 testing.
Further, Lilly is studying a next-generation weight-loss drug, retatrutide. Other companies are testing drugs that impact the GLP-1 receptor and receptors called GIP or glucagon. Lilly's retatrutide targets all three. At 13 weeks, retatrutide led to 12% to 13% more weight loss than a placebo. Risinger expects Lilly to have Phase 3 results for retatrutide starting in the second half of 2025 or early 2025.
He has an outperform rating on Eli Lilly stock. Leerink's Smith rates Viking stock with an outperform.
Viking shares have already surged this year. Earlier this month, Viking said it would unveil the results of its Phase 2 study of the weekly shot in the first quarter. Previously, the company expected to have test results for the weight-loss drug in the first half of the year.
Viking stock has a perfect Relative Strength Rating of 99, according to IBD Digital. This puts shares in the top 1% of all stocks when it comes to 12-month performance.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
