VKTX is a clinical-stage biotech company focused on developing weight-loss medicines. Their lead asset, VKTX2735, is being developed in both injectable and oral formulations. The oral formulation offers greater convenience for patients who might otherwise need to inject the medicine or discontinue therapy altogether. This convenience positions it as a strong contender to capture significant market share upon approval.
In this piece, we’ll walk you through how to position yourself for the Phase 2 trial readout of oral VKTX2735. This event has the potential to trigger a significant stock price movement upon clinical data release. Our goal is to outline the clinical benchmarks oral VKTX2735 must achieve to unlock its commercial potential and drive VKTX stock to new highs - setting you up for a handsome return. To help you navigate this catalyst and act decisively on the readout, we’ve prepared three scenarios for you.
Event Brief
- Oral VKTX2735 is uniquely positioned to become best-in class oral GLP-1 drug. Major catalyst will be the Phase 2 trial data read-out expected in Q4 2025
- VKTX2735 Phase 1 data is already best ever generated data of an oral GLP
- Oral obesity market to be fastest growing segment of strongly growing market. Main driver will be the convenience advantage of orals over the currently dominating injectable weight-loss drugs
Similar read outs, the option market and current valuation of VKTX of $3.64 Bn implies huge stock price upside to $52 upon positive trial data.
Oral obesity market is poised to grow
The recent sell-off of obesity behemoths Novo Nordisk and a slight correction of Eli Lilly have shown that even the ballooning obesity market has its ceiling. Nevertheless, the market is still growing, with leading pharma research agencies projecting compound annual growth rates (CAGRs) of 20-30% until 2028. For instance, the leading pharma research provider IQVIA forecasts, in their base case, a market expansion of $50 Bn by 2028.
Not only is the market huge, but new entrants can also gain market share rapidly. For example, Tirzepatide was launched in the summer of 2022 and has already raked in a mind-boggling $13.4 Bn in revenues over the last twelve months (LTM), highlighting the potential for best-in-class products to capture significant market share.
Thus, the best and most differentiated products will still create billions in shareholder value. Oral VKTX2735 is uniquely positioned with a positive Phase 2 trial to become the frontrunner in the oral obesity space and propel the current market cap of Viking Therapeutics.
But why? It’s the convenience, stupid!
Obesity drugs are mostly not covered by health insurance, and costs are often fully borne by patients themselves. Purchasing decisions are therefore driven by patients, much like lifestyle choices rather than strictly medical decisions.
Current patients’ experiences with the leading GLP-1 drugs, primarily the two best-sellers Semaglutide ($26.4 Bn revenue LTM) and Tirzepatide ($13.4 Bn revenue LTM), often fall short of initial expectations of easy weight loss. This leaves many patients frustrated and creates an opening for new entrants like oral VKTX2735 to address unmet needs and redefine patient satisfaction.
There are two main reasons for that. First, it’s the need for subcutaneous injections: squeezing your disinfected belly fat and inserting a needle into your body. Patients hate it. The second? One in three patients suffers side effects like constant nausea or vomiting. These two factors push many to stop spending thousands of dollars, with discontinuation rates hitting a staggering 50-75% after just one year. Worse, most patients regain the weight they lost, resulting in poor outcomes and billions in forgone NPV for investors.
This is where the oral version of VKTX2735 could change the game. Phase 1 studies show it matches the efficacy of leading injectables but with an edge: convenience. A daily, painless pill that takes seconds to swallow eliminates the dreaded needle routine of today’s GLP-1s.
How does good oral GLP-1 clinical data look like?
We’ve prepared the following clinical data landscape to help you quickly evaluate and trade VKTX stock upon the anticipated clinical data readout.
Oral VKTX2735: The oral contender ready to shake up the market
So far, oral VKTX2735 has delivered standout results in Phase 1, with a placebo-adjusted weight loss of -3.3% at 4 weeks. This represents the best weight loss achieved by any oral molecule in a clinical setting to date. A confirmation of these results in the upcoming Phase 2 trial would be highly catalytic for VKTX.
It’s worth noting that the November 2024 data update (showing a placebo-adjusted weight loss of -6.8% at 4 weeks for doses of 60 mg and above) isn’t reflected here. Why? While the higher dosages demonstrated impressive efficacy, the relatively high incidence of mild side effects has been flagged by doctors as a potential roadblock to actually using the drug.
Below, we summarize the clinical trial data landscape for the primary endpoint of placebo-adjusted weight loss. We’ve included various time horizons of weight loss, ensuring you’re prepared to act regardless of what VKTX includes in its press release.
Clinical weight loss data of oral VKTX-2375 peers
The clinical data landscape positions oral VKTX2735 as a strong contender. Early Phase 1 efficacy data suggests it outperforms injectable heavyweights like Semaglutide and Tirzepatide - both multi-billion-dollar blockbusters. VKTX2735 also shows a slight edge over Orforglipron, its closest rival in the oral segment.
However, patient weight baselines vary - 90 kg for VKTX2735 compared to 111 kg for Orforglipron - highlighting the critical importance of Phase 2 data in providing a clearer comparison.
Meanwhile, injectable Retatrutide, still under development, demonstrates higher efficacy than oral VKTX2735. Hence, we see Retatrutide as the frontrunner for patients seeking drastic and aggressive weight loss, e.g. to get quickly ready for a wedding. That said, a substantial portion of the market is expected to gravitate toward the convenience of oral treatments, positioning VKTX2735 and its peers to capture significant market share.
Safety is too often overlooked
Safety often gets sidelined in the rush for weight-loss drug breakthroughs, but it's actually the deciding factor for many patients. Take Roche’s CT-996 as an example - its Phase 1 data, presented in September 2024 at the EASD in Madrid, showed unacceptable side effects at the highest dose (Cohort 3).
Such high rates of side effects would simply lead to many patients stopping the treatment. In another example, Pfizer’s twice-daily oral Danuglipron was discontinued after hitting its efficacy target. As the Managed Healthcare Executive magazine succinctly put it:
Pfizer has stopped the phase 2 trial of danuglipron (PF-06882961), its twice-daily oral glucagon-like peptide-1 receptor agonist (GLP-1) candidate to treat obesity. Danuglipron was being studied for adults with obesity and without type 2 diabetes.
The study met its primary endpoint demonstrating statistically significant change in body weight from baseline, but more than 50% of patients discontinued treatment across all doses compared about 40% with placebo. No new safety signals were reported and treatment with danuglipron was not associated with increased incidence of liver enzyme elevation compared with placebo. Most adverse events were mild and gastrointestinal in nature.
As a result, we’ve analyzed the safety data for obesity drugs in detail to outline acceptable safety ranges.
Safety & tolerability data of oral VKTX2375 peers
On the safety front, oral VKTX2735 sets itself apart from the competition with its early Phase 1 data. Unlike its peers, it has less side effects such as vomiting and diarrhea and reports a notably low rate of nausea. While it’s still too early to definitively crown it with a favorable safety profile - given the relatively small patient population in these trials - the data so far suggests safety may not be a major concern but rather an advantage with lower drop-out rates for oral VKTX2735.
What would good clinical data for VKTX 2735 look like?
Building on the data above, we see a clear framework for positioning - either long or short - based on the following potential trial outcomes:
🚀 Bull case
The ultimate win for VKTX2735 would be Phase 2 data that sets a new gold standard for oral GLP-1 drugs. Imagine efficacy surpassing the best injectable GLP-1s and safety that holds steady with its current profile. Such data would firmly establish VKTX2735 as the top contender in the oral obesity drug space - capturing convenience-seeking patients and delivering a major shareholder value catalyst.
🐻 Bear case
Failure to differentiate clinically from oral semaglutide (Rybelsus) - a product already on the market - would be disastrous. With Rybelsus losing exclusivity post-2030, VKTX 2735’s launch shortly before the arrival of low-cost generics could spell doom. A flop here would likely trigger a severe sell-off.
🤷♂️ Base case
Somewhere in between lies a neutral scenario - no game-changing data, no dramatic missteps. In this case, we sit back, do nothing, and enjoy the day.
Catalyst valuation: sizing up the impact
With a clear picture of what “good” data might look like, we turned to history to benchmark the potential share price reaction. Predicting stock movements is notoriously tricky, but past obesity-related readouts and VKTX-specific events offer a guide. For added perspective, consider the option-implied pricing we outlined above.
Benchmark #1: Readout of Phase 2 injectable VKTX2375 (Feb 24)
On February 27, 2024, VKTX added approximately $4.3 Bn in market cap following the Phase 2 readout of its injectable version. The stock jumped +105% , and closed three days later at $77.
Benchmark #2: Readout of Phase 1 oral VKTX2375 (Mar 24)
VKTX had a stellar first quarter in 24 due to its second promissing data read out. Oral VKTX 2375 delivered the promissing results (discussed above) and added around $1.3 Bn in market cap.
Drawing from past catalysts, we expect a market cap increase of ~$4.3 Bn in the event of a successful readout - in line with its injectable read-out. Conversely, a disappointing or uncompetitive result could lead to a $1.3 billion drop in market cap which evaporates its Phase 1 gains. This translates to a potential 123% upside or a 38% downside, depending on the outcome (as of 31st of December 24). These expectations are more positive than those observable in the options market, which is pricing in an implied move to $52 or $12 over the next year.
Triangulating between these datapoints leads us to see a development towards $52 or $20 depending on the read-out.
Important caveats to Watch
Any slip in efficacy or the emergence of more significant side effects could dramatically undercut VKTX's upside potential. Furthermore, Eli Lilly's decision to compete on price with Mounjaro - potentially triggering a full-blown price war - should be closely monitored by investors.
On the flip side, GLP-1 molecules are relatively straightforward and inexpensive to manufacture. In fact, based on conversations with biotech manufacturers, a fully scaled production line could bring annual treatment costs down to under $100 per patient - far below the current $4,000 - $10,000 price tag. This aligns with a revealing study led by Melissa J. Barber at Yale Law School and the Yale School of Medicine, which suggests that generic manufacturers could price GLP-1s anywhere between $0.75 and $72.49 per month.
That said, the final market reaction to the readout may hinge not only on the clinical data but also on broader market sentiment and the potential for dilution. Biotech firms often take advantage of favorable trial results to launch secondary share offerings, so keep an eye on that dynamic as well.
Conclusion
The upcoming catalyst for VKTX2735 is one you’ll want to be ready for. Pre-positioning through options and staying on top of fast-moving data will be essential to act quickly, whether you’re looking to enter long or short positions. Timing will be crucial as this event unfolds.
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