Viking Therapeutics: Why the Recent Sell-Off Presents a Strategic Buy Opportunity in the Obesity Drug Gold Rush

The recent 4.73% post-earnings sell-off in Viking Therapeutics (VKTX) has created a compelling entry point for investors seeking exposure to the obesity drug sector. While the stock's decline was driven by a wider-than-expected Q3 2025 net loss of $0.81 per share-attributed to elevated R&D spending and strategic investments in its lead candidate, VK2735-the underlying fundamentals suggest this is a risk-rebalanced opportunity. With a robust cash position, Phase 3 trial momentum, and a dual-format pipeline addressing unmet needs, Viking is poised to outperform in a market where peers like Novo Nordisk and Eli Lilly trade at premium valuations.

A Sell-Off Driven by Short-Term Noise, Not Long-Term Risk

The Q3 loss, which exceeded analyst expectations of $0.70 per share, was a function of Viking's aggressive R&D spending, rising to $90 million from $22.8 million in Q3 2024 according to its financial results. However, this expenditure reflects a deliberate strategy to accelerate development of VK2735, a dual GLP-1/GIP agonist with demonstrated clinical differentiation. The Phase 2 VENTURE-Oral Dosing trial, for instance, showed a 12.2% mean weight loss in patients after 13 weeks-outpacing placebo by 10.9 percentage points. Such data underscores Viking's ability to deliver meaningful outcomes, even as it navigates near-term financial headwinds.

The stock's volatility in the past week, with prices oscillating between $33.81 and $39.99, further highlights overreaction to quarterly results. Viking's $715 million cash balance as of September 30, 2025 according to its financial report, provides ample runway to fund its Phase 3 trials and maintenance dosing studies without dilution, insulating it from the liquidity risks that plague many biotechs.

Catalyst-Driven Valuation: Phase 3 Momentum and Dual-Format Pipeline

Viking's most immediate catalyst is the completion of its Phase 3 VANQUISH-1 and VANQUISH-2 trials. Enrollment in VANQUISH-1, evaluating subcutaneous VK2735 for weight loss, was completed ahead of schedule with 4,650 patients-surpassing the target enrollment. The trial's primary endpoint, a 78-week assessment of body weight change, aligns with FDA requirements for obesity drug approval. Positive results here could position Viking to file for regulatory approval in late 2026, a timeline that mirrors Eli Lilly's orforglipron and Novo Nordisk's oral Wegovy but with a unique dual-agonist mechanism.

Equally compelling is Viking's dual-format pipeline. While the oral formulation of VK2735 showed a 12.2% weight loss in Phase 2, its high discontinuation rate (38% in the highest dose group) raised tolerability concerns according to clinical trial data. However, the subcutaneous version, which is in Phase 3, demonstrated better tolerability and is being studied for long-term maintenance dosing according to financial results. This bifurcated approach-offering both an injectable for sustained weight loss and an oral option for patient preference-positions Viking to capture a broader market share than competitors relying on a single delivery method.

A Discounted Valuation in a Premium Sector

Viking's current valuation appears disconnected from its peers. Novo Nordisk trades at a TTM P/E of 13.14 and a P/S of 4.32 according to stock analysis, while Eli Lilly commands a P/E of 54.3 and a P/S of 16.84 according to market data. These multiples reflect investor confidence in their obesity portfolios, which generated $10.09 billion in combined revenue for Eli Lilly in the latest quarter. Viking, by contrast, trades at a fraction of these valuations despite demonstrating comparable clinical efficacy in its Phase 2 trials.

This discount is partly due to Viking's early-stage status and the inherent risks of Phase 3 trials. However, the company's cash position, clinical progress, and strategic focus on maintenance therapy-addressing a gap in the obesity treatment landscape-suggest its valuation will converge with peers if it meets FDA endpoints. The initiation of a maintenance dosing study, which explores transitioning patients from weekly subcutaneous to monthly or daily oral regimens, further differentiates Viking in a market where long-term adherence remains a challenge.

Fixable Tolerability Issues and Post-FDA Upside

The tolerability issues observed in the oral formulation of VK2735 are not insurmountable. As Viking's CEO Brian Lian noted, the subcutaneous version has shown favorable safety and tolerability profiles, and the company is actively optimizing dosing regimens to mitigate gastrointestinal side effects. This adaptability is critical in a sector where patient compliance directly impacts commercial success.

Post-FDA feedback, Viking's upside potential is substantial. If VK2735 gains approval, it could capture a significant share of the $100 billion obesity drug market, particularly in the maintenance therapy segment. Analysts project that Viking's market capitalization could expand to reflect its revenue potential, especially if it secures partnerships or differentiates itself through real-world evidence of cardiometabolic benefits, such as the reversal of prediabetes and metabolic syndrome observed in Phase 2 according to financial results.

Conclusion: A Strategic Buy in a High-Growth Sector

The recent sell-off in Viking Therapeutics has created an asymmetric opportunity. With a strong cash position, Phase 3 momentum, and a dual-format pipeline addressing both acute and long-term weight management, Viking is well-positioned to capitalize on the obesity drug gold rush. Its current valuation discount relative to peers like Novo Nordisk and Eli Lilly offers a margin of safety, while the completion of its Phase 3 trials and potential FDA approval in 2026 provide clear catalysts for re-rating. For investors willing to tolerate near-term volatility, Viking represents a compelling long-term bet on a transformative therapeutic area.