Viking raids the weight-loss market

Pumpkin spice latte season is officially here, and Viking Therapeutics has some timely news for anyone already regretting the apple cider donut on the side.

Shares surged 35.67% today after the biotech company reported positive data for VK2735, its experimental weight loss drug. Patients receiving weekly injections lost roughly 16% to 19% of their body weight after 21 weeks, and results held up even when Viking started spacing the doses out: Patients that switched to every-other-week dosing kept off up to 97% of the weight they had lost, and those taking the drug just once a month maintained up to 90%.

The weight of expectations

Viking’s rally comes just a day after Novo Nordisk fell 8% on the heels of its investor day, where an ambitious pitch of several new blockbuster launches by 2030 and roughly $23 billion in pipeline drug sales by 2035 still left investors with plenty to worry about.

Much of that concern centers on semaglutide, the active ingredient in Novo’s smash-hit obesity drug Wegovy and diabetes drug Ozempic. As patent protection begins expiring in some markets in the early 2030s, cheaper versions could emerge, forcing Novo to cut prices, weakening its pricing power.

“Yes, the price might go down by 50%, but there is much higher volume,” CEO Mike Doustdar said in an attempt to reassure investors.

Analysts also question whether Novo’s long-term growth targets are ambitious enough, and whether the company will need bigger acquisitions to fill out its pipeline. “Novo’s Capital Markets Day offered little to change our cautious view with mid-single-digit topline growth ambition for 26-30E in line with consensus,” Citi analysts wrote in a note. “M&A focus remains bolt-on, but management did not rule out a large transaction, creating some inherent risk.”

The $100 billion prize

So why can seemingly small differences between drugs trigger massive stock moves? It’s the size of the market: Wall Street estimates that weight loss drugs could generate roughly $100 billion to $150 billion in annual sales by 2030. A pill instead of a shot, or a monthly injection instead of a weekly one, could translate into billions of dollars in sales if a company persuades enough patients to switch.

For now, though, the market is still largely a two-company race. According to IQVIA data, Lilly controls about 60% of US obesity prescriptions, while Novo holds roughly 40%. But that duopoly is increasingly being challenged: Viking is testing less-frequent injections, Roche reported fresh mid-stage data today, and drugmakers including AstraZeneca and Amgen are also trying to break in with their own takes on the next generation of weight loss treatments.

At this rate, you’ll soon be able to pop GLP-1 powder into your morning smoothie.—SY