Viking Therapeutics Jumps 35.7% on Weight-Loss Drug Trial Data

Viking Therapeutics Inc. (NASDAQ:VKTX) closed up 35.67 percent at $40.85 per share on Tuesday, finishing just $2 below its 52-week high, after the company reported results from a clinical trial of its weight-loss drug candidate VK2735.

Patients who took VK2735 lost 16 to 19 percent of their body weight over 21 weeks, the company said, versus no weight loss in the placebo group.

The trial randomized participants to receive weekly doses of VK2735 or placebo for 21 weeks. Starting in Week 3, researchers escalated the VK2735 doses every two weeks until patients reached final doses of 15 mg, 17.5 mg, 20 mg, or 22.5 mg.

During a 12-week maintenance period, patients reported only minimal side effects: nausea, vomiting, diarrhea, constipation, and stomach discomfort.

The Selling Point

The headline weight-loss figures may be secondary. Viking's real bet with VK2735 is that patients can maintain their weight loss without injecting themselves every week. Instead, the company is testing whether injections can be spaced to every two weeks, or even once a month.

"The results of our innovative maintenance dosing study continue to demonstrate the significance of VK2735's unique and differentiated half-life and PK profile, which appear to enable an effective new approach to achieving and maintaining the weight loss goals of patients living with obesity," Viking Therapeutics CEO Brian Lian said in a statement.

That pharmacokinetic profile matters commercially. Current obesity treatments demand frequent dosing, and any candidate that stretches the interval between injections would carry a convenience advantage in a market where adherence drives outcomes.

Goldman Sachs Stays Neutral

Goldman Sachs kept a neutral rating on Viking Therapeutics despite the data. The investment firm called the results encouraging but said they were anticipated, given a study design that tested multiple dosing options.

Goldman Sachs also argued that a longer follow-up period is needed to assess how durable the weight-loss maintenance proves to be, especially for monthly dosing.

The firm reiterated a $38 price target on the stock — a 7 percent discount to Tuesday's closing price of $40.85. In effect, Wall Street's sell side thinks Tuesday's rally overshot what the data justified.

Hedge Funds Went the Other Way

Institutional investors were positioned bullish on Viking Therapeutics before the trial results landed.

Data from Insider Monkey showed that 47 hedge funds held positions in the stock in the second quarter, up from 44 in the first quarter. Their combined holdings rose 25 percent quarter-on-quarter, to $551 million from $441 million.

The divergence between a cautious Goldman Sachs and accumulating hedge funds frames the next leg of the VK2735 story: whether longer maintenance data, particularly on monthly dosing, can validate the half-life argument that management says separates the drug from its competitors.