Is Viking Therapeutics a Buy on the Dip After a 38% Sell-Off?

The recent 38% plunge in Viking Therapeutics (NASDAQ: VKTX) stock has sparked a wave of skepticism—and opportunity. The sell-off, triggered by mixed Phase 2 results for its oral VK2735 weight loss drug, has left the stock trading at $24 as of late August 2025, far below its $89 average analyst price target. But for investors with a long-term horizon, this dip may represent a chance to separate hype from substance in a biotech company with a pipeline that extends far beyond its flagship obesity candidate.

Near-Term Setbacks: A Harsh Reality Check

Viking's troubles began with the VENTURE-Oral Dosing trial for VK2735, which showed a 12.2% average weight loss at the highest dose—a result that initially seemed competitive with Eli Lilly's orforglipron (12.4%). However, the tolerability issues overshadowed this progress. A 28% discontinuation rate due to side effects like nausea and vomiting is alarming, especially when compared to orforglipron's 10.3% rate. Compounding the problem, the placebo group in Viking's trial had a 13% discontinuation rate, versus just 2.6% in Lilly's trial. This discrepancy raises questions about patient recruitment, trial design, or even unaddressed comorbidities in Viking's cohort.

The market's reaction was swift. On August 19, 2025, shares plummeted 42% as investors recalibrated expectations. The oral formulation of VK2735, once seen as a potential blockbuster, now faces an uphill battle to prove its commercial viability.

Long-Term Pipeline: A Diversified Bet on Metabolic and Rare Diseases

While the oral VK2735 setback is significant, it's not the end of Viking's story. The company's pipeline spans multiple therapeutic areas, with several candidates in advanced stages of development:

1. Subcutaneous VK2735 (Phase 3):
   The injectable version of VK2735 is currently in Phase 3 trials (VANQUISH-1 and VANQUISH-2), with earlier Phase 2 data showing 13.1% placebo-adjusted weight loss. Unlike the oral formulation, the subcutaneous version may offer better tolerability and efficacy, aligning with the market's preference for injectable obesity drugs. If successful, this could position Viking as a direct competitor to Novo Nordisk and Eli Lilly.

2. VK2809 for NASH/MASH (Phase 2b):
   This thyroid hormone receptor β-selective agonist has shown statistically significant reductions in LDL-C and liver fat in NASH patients. With the global NASH market projected to exceed $50 billion by 2030, VK2809's potential is immense.

3. VK0214 for X-ALD (Phase 1b):
   Targeting a rare genetic disorder, this oral drug reduced harmful lipid levels in early trials. The rare disease space offers high margins and regulatory incentives, making it a strategic asset for Viking.

4. VK5211 and VK0612:
   These earlier-stage candidates for hip fracture recovery and type 2 diabetes, respectively, add further diversification to Viking's portfolio.

Valuation Attractiveness: A Discounted Opportunity

Viking's current valuation appears disconnected from its pipeline progress. At $24 per share, the stock trades at a steep discount to its $89 average analyst target. This disconnect may reflect over-pessimism about VK2735's oral formulation, while underestimating the potential of its broader programs.

However, the company's lack of revenue and reliance on clinical milestones mean risks remain. A failure in the Phase 3 trials for subcutaneous VK2735 or a setback in VK2809's NASH trials could further depress the stock. Conversely, positive data could catalyze a re-rating.

Investment Thesis: Balancing Risk and Reward

For risk-tolerant investors, Viking presents a speculative but compelling case. The key question is whether the company can pivot from its oral VK2735 disappointment to capitalize on its subcutaneous formulation and NASH pipeline. The Phase 3 trials for subcutaneous VK2735, expected to enroll 4,500 patients, will be critical. Success there could restore investor confidence and unlock value.

Meanwhile, VK2809's progress in NASH and VK0214's rare disease potential offer alternative pathways to growth. If Viking can demonstrate differentiation in these areas, the current valuation discount may prove to be a buying opportunity.

Final Verdict: A Buy on the Dip for the Long-Term

Viking Therapeutics is a high-risk, high-reward play. The 38% sell-off has priced in the worst-case scenario for VK2735's oral formulation, but the company's diversified pipeline and undervalued shares suggest there's room for optimism. Investors should monitor the Phase 3 trial results for subcutaneous VK2735 and the NASH trial readouts for VK2809.

For those willing to stomach the volatility, Viking could be a transformative holding if its pipeline delivers. However, this is not a short-term bet—it's a long-term play on a company with the potential to redefine its role in metabolic and rare diseases.