Viking slips as manufacturing concerns cloud promising oral obesity drug data

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By Sriparna Roy and Bhanvi Satija

(Reuters) -Viking Therapeutics shares reversed course to fall 8% on Monday as focus shifted to the drug developer’s ability to mass produce its oral obesity treatment that was shown to be safe and effective in a small trial.

Nine patients who received the highest 100 milligram dose of VK2735 lost an average of 8.2% of their body weight after 28 days, compared to 1.4% for a placebo, in the early stage trial, the company said at the ObesityWeek conference on Sunday.

Although its shares rose initially on favorable comments about the drug’s safety from at least three analysts, questions over its ability to capture a bigger share of the hyper competitive market for obesity drugs led to a drop in its share price.

Viking stock, which has more than tripled this year, was set to lose over $600 million in market value if losses hold.

At least two analysts said that Viking may not be able to produce enough of its treatment, especially at the 100 mg or higher doses.

“We’re not saying it’s impossible for Viking to manufacture, however we think it will be costly with capital requirements and expertise beyond what Lilly and Novo currently have,” Deutsche Bank analyst James Shin said in a note.

In Viking’s 92-patient study, six of nine participants on the highest dose experienced mild nausea. One experienced vomiting.

“As far as the landscape goes they are certainly a leader amongst the early clinical data and we’ll have to see if that pans out in larger studies,” said BTIG analyst Justin Zelin.

Stock weakness also reflects that Viking’s drug is behind in development compared to rivals such as Structure Therapeutics and Eli Lilly, he added.

Novo Nordisk and Lilly, which currently dominate the market with their injectable weight-loss drugs, are also further along in developing their oral versions.

Lilly slipped 1.3% to $808.51, and U.S.-listed shares of Novo Nordisk were down about 1.5% at $110.22, weighed down in part by AstraZeneca’s early-stage data for an experimental weight-loss pill.

Lilly has said it expects to unveil late-stage data for its oral obesity drug, orforglipron, in April 2025.

Novo said in March patients lost up to 13.1% of their weight after 12 weeks while taking its experimental weight-loss pill amycretin in an early-stage trial. Lilly reported last year that orforglipron led to a 14.7% weight loss after 36 weeks in a mid-stage trial.

Smaller rival Structure’s experimental oral obesity drug was shown to help reduce weight by 6.2% on average in a mid-stage study. Its shares were down 2.5% at $40.09.

Viking reported cash, equivalents and short-term investments of $930 million, as of Sept. 30.

The company’s price-to-tangible-book-value ratio, a common benchmark for valuing stocks, stood at 8.91 on Monday, compared to 2.55 for Structure Therapeutics, according to LSEG data.

(Reporting by Sriparna Roy and Bhanvi Satija in Bengaluru, and Patrick Wingrove in New York; Editing by Sriraj Kalluvila and Anil D’Silva)