Eli Lilly(NYSE: LLY) sells a wide range of drugs that treat different diseases, but one portfolio in particular has seen profits and stocks soar in recent times. It consists of the company’s weight loss medications: Mounjaro, approved for type 2 diabetes but also prescribed off-label for weight management, and Zepbound, approved specifically for the weight management indication.
These medications, both dual GIP/GLP-1 receptor agonists, work by acting on hormones involved in the digestive process – and as a result, they help control blood sugar levels and appetite. Lilly and its major pharmaceutical rival Novo Nordisk dominate the weight-loss drug market today, but competition may be on the horizon.
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One emerging player is attracting a lot of attention these days thanks to fantastic clinical trial results. And the first weight loss candidate could soon launch Phase 3 trials, the final stage of development before a regulatory review. I’m talking about Viking therapies(NASDAQ: VKTX).
Should you forget Eli Lilly and buy this wonderful biotech instead? Let’s find out.
Image source: Getty Images.
Viking’s candidate, like Lilly’s drugs, is a dual GIP/GLP-1 receptor agonist. Like Mounjaro and Zepbound, VK2735 is administered by injection. In a Phase 2 study, VK2735 met all primary and secondary endpoints and resulted in an average weight reduction of as much as 14.7% after 13 weeks. The company plans to meet with regulators this quarter to prepare for a Phase 3 trial.
Viking recently stood out during Obesity Week, an annual event that highlights advances in weight loss, when it talked about the oral formulation of VK2735. In a Phase 1 study, the candidate showed a reduction in average body weight of up to 8.2% after just 28 days – and, importantly, it was well tolerated even at the highest dose of 100 mg per day. A pill format could be a game changer as it makes administering the drug easier and more convenient for patients.
Now let’s look at Viking’s chances of winning in the weight loss market, given the strength of today’s leaders. It is true that these large pharmaceutical companies have the advantage of being first to market and have the resources to support advertising and production, as well as the development of new candidates.
Speaking of new candidates, Lilly is also working on an oral weight-loss drug – and Lilly’s candidate is involved in phase 3 trials. So if all goes well, it should reach commercialization before Viking.
I wouldn’t see Viking or other new players as a threat to today’s leaders. That said, given the demand in this market and the growth forecasts, there is room for more than just a few players to succeed in this space. Demand for weight-loss drugs in recent years has put Lilly and Novo Nordisk drugs on the U.S. Food and Drug Administration’s (FDA) drug shortage list — and prompted both companies to increase their investments in manufacturing capacity.
And as for growth, the obesity drug market could reach $130 billion by the end of this decade Goldman Sachs Research. That’s more than Goldman’s previous forecast of $100 billion.
All this means that even if Viking Therapeutics comes to market much later than its major pharmaceutical rivals, it could still capture market share. And a company of this size – with a market value of $6.7 billion compared to Lilly’s $777 billion – could become very successful, even with a much smaller share of the obesity drug market than the pharmaceutical giants. Viking could also score a win for investors if it partners with another player or agrees to a buyout. Many in the industry are eager to enter the weight loss drug market, and Viking offers a promising pipeline.
Now let’s get back to our question: should you forget about Lilly and go for this exciting biotech stock? This depends on your comfort with risk. If you’re a cautious investor, you’re better off sticking with Lilly: it offers a solid earnings record, the security of a broad product portfolio, and passive income through the payment of dividends.
However, if you can handle some risk and want to add a dynamic growth stock to your portfolio, you may prefer Viking. The stock is known to be rising on positive data from its weight-loss program, and since we’re only at the beginning of this story, there are plenty of catalysts ahead.
Consider the following before purchasing shares in Viking Therapeutics:
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Adria Cimino has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Goldman Sachs Group. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
Should you forget Eli Lilly and buy these great biotech stocks instead? was originally published by The Motley Fool
