VKTX Plunges 41.8% Amid Mixed Obesity Trial Results—What’s Next for the Biotech?

Summary
• Viking Therapeutics (VKTX) shares nosedived 41.8% intraday, trading at $24.49 as of 18:44 ET.
• Phase 2 trial data showed 12.2% weight loss with VK2735 but highlighted 28% discontinuation rates due to GI side effects.
• Eli Lilly’s (LLY) stock rose 1.09% as investors shifted to GLP-1 leaders.

Viking Therapeutics’ stock imploded on Tuesday following mixed Phase 2 trial results for its obesity pill, VK2735. Despite statistically significant weight loss, high discontinuation rates and unfavorable comparisons to competitors like Eli Lilly’s Zepbound triggered a sharp sell-off. The stock’s intraday range—from $23.21 to $26.25—underscores the volatility, with technical indicators suggesting a potential short-term rebound but long-term uncertainty.

Mixed Trial Data Sparks Investor Flight
Viking’s 41.8% intraday drop was driven by investor skepticism over its Phase 2 trial results. While the study achieved primary endpoints with 12.2% weight loss, the 28% discontinuation rate (vs. 13% for placebo) and high GI side effects (58% nausea, 26% vomiting) raised red flags. Analysts like Mizuho’s Jared Holz noted Viking’s data ‘look inferior’ to Eli Lilly’s orforglipron, which showed 12.4% weight loss with lower discontinuation rates in a 72-week trial. The market’s reaction reflects concerns over Viking’s ability to compete in the crowded GLP-1 space, where Novo Nordisk and Lilly dominate with injectable formulations.

Biotech Sector Volatile as GLP-1 Leaders Outshine
The biotech sector saw mixed performance, with Eli Lilly (LLY) rising 1.09% and Novo Nordisk (NVO) up 2% as investors favored established GLP-1 leaders. Viking’s struggles highlight the sector’s risk profile: while obesity drugs remain a growth area, companies with weaker Phase 2 data face steep hurdles. Novo’s Wegovy and Lilly’s Zepbound, both with longer-term efficacy and lower side effects, are seen as more viable near-term options, further pressuring Viking’s market position.

Options and ETFs for Navigating VKTX’s Volatility
• 200-day average: 34.99 (below current price)
• RSI: 75.16 (overbought)
• MACD: 2.75 (bullish divergence)
• Bollinger Bands: $28.85 (lower band) vs. $42.50 (upper band)

Viking’s technicals suggest a short-term rebound from oversold levels but long-term bearish pressure. Key support/resistance levels at $23.21 (intraday low) and $26.25 (intraday high) will dictate near-term direction. The 52-week low of $18.92 adds a floor for downside risk. Given the stock’s volatility, options with high gamma and theta are preferable for short-term plays.

Top Options Contracts:
1. VKTX20250829P25 (Put, $25 strike, 8/29 expiration):
- IV: 103.47% (high volatility)
- Leverage Ratio: 11.72% (moderate)
- Delta: -0.5179 (sensitive to price swings)
- Theta: -0.0213 (time decay)
- Gamma: 0.0910 (high sensitivity to price movement)
- Turnover: $145,846 (liquid)
- Payoff (5% downside): $0.245 (max(0, 23.27 - 25)).
This put option offers high gamma and moderate leverage, ideal for capitalizing on a potential breakdown below $25.

2. VKTX20250829C26 (Call, $26 strike, 8/29 expiration):
- IV: 103.84% (high volatility)
- Leverage Ratio: 21.76% (aggressive)
- Delta: 0.3968 (moderate sensitivity)
- Theta: -0.1107 (rapid time decay)
- Gamma: 0.0878 (high sensitivity)
- Turnover: $261,173 (liquid)
- Payoff (5% downside): $0 (max(0, 23.27 - 26)).
This call option’s high leverage and gamma make it suitable for a short-term rebound trade, though downside risk is significant.

Trading Insight: Aggressive bears may target VKTX20250829P25 for a breakdown below $25, while bulls should watch for a rebound above $26.25 to retest the 52-week high of $81.73.

Backtest Viking Therapeutics Stock Performance
The backtest of VKTX's performance after a -42% intraday plunge shows favorable results, with the ETF experiencing a maximum return of 13.43% over 30 days. The 3-Day win rate is 46.59%, the 10-Day win rate is 49.83%, and the 30-Day win rate is 49.83%, indicating a higher probability of positive returns in the short to medium term following the dramatic drop.

VKTX’s Path Forward: Rebound or Reckoning?
Viking’s 41.8% drop reflects investor doubts over its ability to compete in the GLP-1 space, but technicals hint at a potential short-term bounce from oversold levels. The key will be whether the stock holds above $23.21 (intraday low) or breaks below it, triggering further selling. Meanwhile, Eli Lilly’s 1.09% gain underscores the sector’s preference for proven leaders. Investors should monitor Viking’s upcoming maintenance dosing study and regulatory feedback on VK2735’s safety profile. For now, options like VKTX20250829P25 offer high-gamma exposure to a potential breakdown, while bulls may wait for a rebound above $26.25 before re-entering.