Viking Therapeutics' Path Forward: Navigating Phase 2 Setbacks to Unlock Obesity Market Potential

Viking Therapeutics (NASDAQ: VKTX) has long positioned itself as a contender in the high-stakes obesity drug market, a sector now dominated by blockbuster injectable therapies like Novo Nordisk's Wegovy and Eli Lilly's Zepbound. The recent Phase 2 VENTURE-Oral Dosing trial of its dual GLP-1/GIP agonist, VK2735, delivered a mixed bag of results: statistically significant weight loss of up to 12.2% in 13 weeks, but also notable gastrointestinal (GI) adverse events leading to a 28% discontinuation rate in the drug arm. While these outcomes highlight the drug's efficacy, they also underscore the challenges of balancing potency with tolerability—a critical hurdle for any therapy aiming to compete in a market where patient adherence and long-term use are paramount.

The Phase 2 Setback: A Foundation for Strategic Refinement

The VENTURE-Oral Dosing trial's primary endpoint—a 12.2% mean weight loss in the highest-dose group—was undeniably impressive. Yet the 28% discontinuation rate due to GI issues (nausea and vomiting) raises questions about the drug's commercial viability. For context, Novo Nordisk's Wegovy, which achieved a 15% weight loss in 68 weeks, has a discontinuation rate of ~15% due to side effects. Viking's data suggest that while VK2735 is potent, its side effect profile may deter long-term use unless mitigated.

However, the trial also revealed a key insight: GI adverse events were most severe early in treatment and diminished over time. This pattern aligns with the mechanism of GLP-1/GIP agonists, which often cause transient GI distress as the body adjusts. Viking's titration strategy—gradually increasing doses from 30 mg to 120 mg—already showed promise in reducing the frequency of these events. The company's Phase 3 plans, which include evaluating lower, more tolerable doses (7.5 mg to 17.5 mg weekly subcutaneous formulations), could address this issue while maintaining efficacy.

Dose Optimization: A Dual-Pronged Approach

Viking's Phase 3 strategy, dubbed the VANQUISH program, is designed to refine VK2735's dosing regimen. The company is testing four weekly subcutaneous doses (7.5 mg, 12.5 mg, 17.5 mg, and placebo) in two trials: VANQUISH-1 (4,500 patients with obesity) and VANQUISH-2 (1,100 patients with type 2 diabetes). The goal is to identify the optimal balance between efficacy and tolerability.

A particularly intriguing aspect of Viking's approach is its exploration of a “maintenance phase” after initial weight loss. Data from the Phase 2 trial showed that patients who transitioned from 90 mg to 30 mg doses maintained their weight loss without significant side effects. This could position VK2735 as a long-term maintenance therapy, a niche currently underserved in the obesity market. If successful, this strategy could differentiate VK2735 from competitors by offering a two-phase treatment: aggressive weight loss followed by a lower-dose, more tolerable maintenance phase.

Manufacturing and Partnership: Scaling for Success

Viking's recent partnership with CordenPharma—a leading contract manufacturer—addresses a critical bottleneck: scaling production for both oral and subcutaneous formulations. The agreement secures dedicated capacity for API production and fill/finish operations, including 100 million autoinjectors and one billion oral tablets annually. This ensures Viking can meet demand if VK2735 gains regulatory approval, a crucial factor in a market where supply chain disruptions have delayed competitors.

The $150 million prepayment to CordenPharma, while a significant cash outlay, is a calculated risk. With $808 million in cash reserves as of June 2025, Viking has the financial flexibility to absorb this cost while advancing its Phase 3 trials. The partnership also signals confidence in VK2735's commercial potential, as CordenPharma's involvement suggests a belief in the drug's market viability.

Market Differentiation: Oral vs. Injectable

Viking's dual formulation strategy—oral and subcutaneous—could be its most compelling edge. While injectables like Wegovy and Zepbound dominate the market, oral therapies remain a niche with growing demand. The Phase 2 oral trial of VK2735, which reported top-line results in late 2025, could position the company to capture patients who prefer non-invasive treatments. However, the oral formulation's 12.2% weight loss in 13 weeks lags behind the 15% seen in injectable trials, raising questions about its competitive positioning.

The subcutaneous formulation, on the other hand, offers a stronger efficacy profile but must overcome the stigma of injections. Viking's once-monthly administration plan, currently in preclinical testing, could bridge this gap by improving adherence while reducing GI exposure. If successful, this approach could carve out a unique niche for VK2735 in a market saturated with weekly injectables.

Investment Implications: Balancing Risk and Reward

Viking's path to commercialization hinges on three factors:
1. Phase 3 Efficacy and Safety: The VANQUISH trials must replicate Phase 2's weight loss results while reducing discontinuation rates. A 10% or lower GI-related dropout rate would be critical for FDA approval and payer acceptance.
2. Dose Optimization: The ability to maintain efficacy at lower doses will determine VK2735's long-term appeal. A maintenance phase that avoids weight regain could justify its use in a broader patient population.
3. Manufacturing Scalability: CordenPharma's capacity must align with projected demand. Any delays in scaling production could erode Viking's first-mover advantage.

From an investment perspective, Viking presents a high-risk, high-reward opportunity. The company's $808 million cash reserves provide a buffer for Phase 3 trials, but its market cap of ~$2.5 billion (as of August 2025) reflects skepticism about its ability to compete with Novo and Lilly. If VK2735 demonstrates robust Phase 3 results and secures FDA approval, the stock could see a multi-bagger move, particularly if it captures a 5-10% share of the $100 billion obesity market. However, investors should brace for volatility, as any setbacks in Phase 3 or manufacturing delays could trigger sharp declines.

Conclusion: A Calculated Bet on Innovation

Viking Therapeutics' Phase 2 setback is not a death knell but a strategic inflection point. By refining its dosing strategy, leveraging its CordenPharma partnership, and differentiating through dual formulations, the company has a viable path to Phase 3 success. For investors willing to tolerate near-term uncertainty, VK2735's potential to address unmet needs in obesity management—particularly in long-term maintenance therapy—could justify the risk. The coming months will be pivotal: the Phase 3 trials and oral formulation results will determine whether Viking can transform its setback into a breakthrough.