Eli Lilly (LLY -0.01%) is currently the leader in the weight loss market. However, the company’s success is attracting increasingly more competition, and we should see several anti-obesity medicine launches over the next few years. Viking Therapeutics (VKTX -3.69%) is one of those drugmakers that might eventually challenge Eli Lilly. And recently, the clinical-stage biotech released excellent data from a clinical trial, highlighting how promising some of its candidates are.
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Viking’s significant clinical win
Viking Therapeutics ran a study that enrolled approximately 180 patients who took either various doses of its leading pipeline candidate, subcutaneous VK2735, or a placebo. They started with a weekly dosing schedule. And after 21 weeks, patients on VK2735 had lost between about 16% and 19% of their body weight. Those are already strong results, but there is more. After the 21-week induction phase, patients switched to several maintenance regimens, including taking VK2735 every other week or monthly for 12 weeks.
Patients on the every-other-week schedule maintained up to 97% of their weight loss, and those taking the medicine monthly maintained up to 90% — those in the placebo group achieved a comparatively low 61% weight-loss maintenance.
These results support Viking Therapeutics’ hopes to become a leader in the weight-loss market through VK2735, for which an oral formulation is also in clinical trials. And there could be an attractive commercial opportunity for the biotech. It may be able to attract some patients for maintenance dosing after they have lost weight on Eli Lilly’s Zepbound. Despite this potential threat, the market isn’t overly worried about Eli Lilly.
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Why Eli Lilly’s stock barely moved
There are at least three major reasons why Eli Lilly’s shareholders shouldn’t be too concerned about Viking’s recent clinical win. First, the clinical-stage biotech ran this study with patients receiving subcutaneous VK2735 during the initial weight-loss stage of the trial, before switching to either every-other-week or monthly dosing of the same medicine. Would patients who initially lost weight on Zepbound achieve similar maintenance results? We don’t know, and Viking’s clinical trial doesn’t tell us.
Second, Viking’s study was closer to a proof-of-concept than a late-stage, pivotal clinical trial. Third, and perhaps most importantly, Eli Lilly has its own maintenance strategy. In a Phase 3 study, the pharmaceutical giant tested whether taking Foundayo — its oral weight loss medicine — would help patients who had lost weight on Zepbound or Wegovy keep the weight off. The results were pretty strong, with patients initially on Wegovy regaining only about 0.9 kg after 52 weeks of daily oral Foundayo (on average), and those initially on Zepbound regaining about 5 kg.
Also, in another maintenance study, Eli Lilly showed that people who switched to a lower dose of Zepbound after losing significant weight on higher doses were still able to keep most of the weight off. Eli Lilly has its own sophisticated, multi-pronged maintenance strategy, and, at any rate, Viking will still need to confirm its recent results in longer, larger clinical trials. That helps explain why Eli Lilly’s stock barely moved on the news.
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Which is the better buy?
Eli Lilly continues to post outstanding financial results thanks to its diabetes and weight loss medicines, and the company has a deep pipeline in these areas. Foundayo could earn a label expansion for type 2 diabetes, while the company’s next-gen medicine, retatrutide, is looking highly promising as well after posting fantastic Phase 3 clinical trial results.
Further, Eli Lilly has significantly diversified its pipeline in recent years and should make meaningful clinical progress in other areas over the next few years. The stock looks attractive for all those reasons. But could the smaller Viking Therapeutics have even more upside potential? Viking’s shares could skyrocket if its leading candidate can prove highly effective in ongoing Phase 3 clinical trials, while other pipeline products also make meaningful progress. That could lead the company to become a leader in the fast-growing weight-loss market.
However, Viking also carries significant risk, as major clinical setbacks could destroy the company’s prospects. Risk-averse investors will definitely opt for the safer Eli Lilly, but Viking is worth consideration for aggressive investors comfortable with significant volatility.
