Viking Therapeutics Faces Market Challenges Despite Promising Drug Pipeline

Nearly a year ago, Viking Therapeutics (NASDAQ: VKTX) shares exploded higher after the clinical-stage drugmaker announced successful results from a clinical trial with an experimental weight loss drug.

Viking Therapeutics' weight management candidate could produce blockbuster sales down the road, but this isn't enough to hold the attention of a stock market obsessed with artificial intelligence (AI). When the market closed on Feb. 5, shares of Viking Therapeutics were down about 65% from the peak they reached in 2024.

Is Viking Therapeutics stock a bargain at its beaten-down price? Let's weigh some reasons to buy right now against the risks it faces to find out.

It's hard to overstate the commercial success of drugs that reduce appetites by acting on glucagon-like peptide-1 (GLP-1) receptors. Sales of semaglutide, the injection Novo Nordisk markets as Ozempic and Rybelsus for diabetes and as Wegovy for weight management, reached $19.4 billion during the first nine months of 2024.

Novo Nordisk's semaglutide sales are enormous, but it's losing ground to tirzepatide, a more recently launched drug from Eli Lilly (NYSE: LLY) that acts on GLP-1 and GIP receptors. The dual agonist approach appears to improve efficacy and sales growth. Lilly began marketing tirzepatide as Mounjaro for diabetes patients in 2022, then as Zepbound for weight management in 2023. Despite being relatively new to the market, total tirzepatide sales came in at a little over $11 billion during the first nine months of 2024.

Viking Therapeutics stock jumped higher last year because it looks like a dual GLP-1/GIP agonist it's developing could outperform tirzepatide. The injectable version of the candidate, tentatively named VK2735, reduced obesity patients' weight by 14.7% after 13 weeks in a relatively small phase 2 trial.

Viking continued to impress investors with surprising results from an oral formulation of VK2735 last March. In a phase 1 study, the seven patients given the highest dose tested reduced their weight by 5.3% on average after just 28 days of daily dosing.

In addition to VK2735, Viking has a candidate for metabolic dysfunction associated steatohepatitis (MASH) called VK2809, which is ready to begin phase 3 testing. Treatment with the experimental thyroid hormone receptor agonist in a phase 2 trial significantly reduced patients' liver fat levels. People randomized to receive VK2809 were more than twice as likely to resolve symptoms related to liver inflammation.