Viking Therapeutics stock (NASDAQ: VKTX) plunged 37% in pre-market trading on Tuesday following the release of much-anticipated results from its mid-stage trial for the oral weight loss drug VK2735.
The drop, which deepened as premarket trading commenced, surprised some investors, especially as the company touted statistically significant weight loss results in the study.
Despite these positive topline numbers, the Street’s reaction was harsh as concerns mounted over high dropout and side effect rates, diminishing enthusiasm for what was expected to be a robust obesity drug pipeline.
Viking Therapeutics stock: What’s behind the steep drop?
The drop came as the company announced that VK2735’s Phase 2 trial participants experienced average weight reductions of up to 12.2% over 13 weeks, results that generally compare favorably with other GLP-1/GIP agonists targeting obesity.
Notably, the rate of weight loss did not plateau, hinting at further efficacy potential in longer studies.
However, the flipside was a pronounced rate of gastrointestinal side effects: nearly 38% of subjects taking the highest VK2735 dose discontinued treatment early, and the overall discontinuation rate, spanning all dosing groups, hit 28%, substantially higher than the 18% observed in the placebo arm.
This marked the second day in a row where the stock declined, compounding investor worries over market adoption and tolerability.
The broader pharma sector was also in the spotlight as Norway’s Novo Nordisk secured a new FDA approval for Wegovy, its competing obesity therapeutic, in treating noncirrhotic MASH (metabolic dysfunction-associated steatohepatitis).
The positive development there had initially buoyed investor hopes for smaller obesity drug developers like Viking Therapeutics, before the clinical data dampened sentiment.
What analysts say?
Despite the selloff, analysts defended Viking’s long-term outlook. Piper Sandler reiterated an “overweight” rating with a $71 target, noting that higher dropout rates were not unexpected given the trial’s rapid dose escalation.
The analysts argued the VK2735 program still holds blockbuster potential, projecting up to $2.1 billion in sales if the oral version proves more tolerable and clears future FDA phases.
They also pointed to Phase 3 plans with slower titration, which could cut discontinuation and boost adherence.
Some took a more cautious view, stressing that adoption will depend on balancing weight-loss gains with side effects.
With Novo Nordisk and Eli Lilly already leading the obesity drug market, Viking faces pressure to refine formulations or target patient groups more precisely to carve out share as the space grows.
Viking Therapeutics responded in a statement that it remains confident in VK2735’s potential and is moving quickly to advance to larger trials.
The company also pointed to early safety data suggesting that most side effects were mild to moderate, with overall safety “comparable to other drugs of this class.”
Nonetheless, the market’s reaction underscores heightened expectations and sensitivity in the fiercely competitive obesity treatment space.
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