Viking Therapeutics Stock Plummets 24%: Merck's Move Threatens Obesity Drug Pipeline

Viking Therapeutics (VKTX) stock experienced a significant decline in December 2024, dropping by 24% following Merck's (MRK) licensing deal with Hansoh Pharma for the investigational weight-loss drug HS-10535. This move by Merck posed a serious threat to Viking's lead pipeline program, VK2735, which is also an obesity drug and had tested well in clinical trials. The news of Merck's aggressive entry into the potentially lucrative segment of the pharmaceutical market led to a decrease in investor confidence in Viking Therapeutics.

Viking Therapeutics' response to Merck's move was crucial in rebuilding investor confidence. The company highlighted the advantages of its lead pipeline program, VK2735, which is an orally administered treatment, giving it an edge over competing products like Novo Nordisk's Wegovy and Eli Lilly's Zepbound, which are delivered via injection. Additionally, Viking's positive clinical trial results for VK2735 further bolstered investor confidence. In February 2024, the company announced top-line results from its Phase 2 VENTURE trial, which demonstrated statistically significant reductions in body weight compared with placebo. Patients receiving weekly doses of VK2735 showed reductions in mean body weight ranging up to 14.7% from baseline, with no plateau observed for weight loss at 13 weeks.

However, Merck's significant investment in HS-10535 ($112 million upfront payment, up to $1.9 billion in milestone payments and royalties) indicates its commitment to the drug and potential competitive pressure. Viking Therapeutics will need to continue to differentiate its drug from Merck's HS-10535 and maintain investor confidence in its pipeline.

In conclusion, Viking Therapeutics' stock plummeted by 24% in December 2024 due to Merck's licensing deal with Hansoh Pharma for HS-10535, which posed a serious threat to its obesity drug pipeline. Viking's response to this challenge, emphasizing the advantages of its lead pipeline program and highlighting positive clinical trial results, helped to rebuild investor confidence in the company's future prospects. However, Merck's significant investment in HS-10535 indicates strong competition in the market, and Viking Therapeutics will need to continue to differentiate its drug and maintain investor confidence in its pipeline.