Viking Therapeutics (VKTX): Riding Clinical Catalysts in a Post-Danuglipron World

The obesity drug market is at an inflection point. With Novo Nordisk's Ozempic and Eli Lilly's Wegovy dominating the injectable GLP-1 agonist space, the race to develop an effective oral alternative has intensified. Viking Therapeutics (NASDAQ: VKTX) finds itself at the forefront of this race with its dual GLP-1/GIP agonist, VK2735, which has shown promising Phase 1 data. But the path to commercial success is fraught with risks—from clinical setbacks to intense competition. Here's why investors should pay close attention to Viking's near-term catalysts and how competitor missteps could amplify its upside.

VK2735's Phase 1 Data: A Safety Profile to Rival Injectables

Viking's oral VK2735 emerged as a contender in early 2025 after Phase 1 results demonstrated dose-dependent weight loss. At the highest 40mg dose, patients saw a 5.3% reduction in body weight from baseline, with 57% achieving ≥5% weight loss—a stark contrast to placebo's 0%. Notably, these effects persisted even six days after stopping the drug, hinting at sustained efficacy. Perhaps most importantly, adverse events were mild (mostly gastrointestinal), and no serious safety issues arose.

This stands in sharp contrast to Pfizer's recent discontinuation of its oral GLP-1 agonist, danuglipron, after a trial participant developed drug-induced liver injury. While danuglipron met pharmacokinetic targets, its safety profile proved insufficient, underscoring the high bar for oral obesity therapies. Viking's clean Phase 1 data suggests VK2735 could avoid similar pitfalls, positioning it as a safer alternative to injectables while offering the convenience of oral administration.

2025 Catalysts: Data Readouts and Investor Conferences

The second half of 2025 is critical for Viking. The company is preparing to deliver pivotal updates:

1. Phase 2 VENTURE-Oral Dosing Results (Late 2025): This trial, fully enrolled with 280 obese adults, will assess VK2735's efficacy and safety over 13 weeks. Early Phase 1 data at 100mg showed an 8.2% placebo-adjusted weight loss, suggesting potential to match or exceed subcutaneous formulations. Positive results here could validate oral VK2735 as a best-in-class candidate.

2. Goldman Sachs and Scotiabank Conferences (June 2025): Viking's management will participate in investor meetings during the Goldman Sachs Global Healthcare Conference (June 9–11) and the Scotiabank Healthcare Canadian Investor Day (June 17). These events provide a platform to highlight progress in VK2735's Phase 3 subcutaneous trials (already enrolling 5,600+ patients) and the DACRA program for obesity. Analysts will scrutinize whether the company can leverage these events to reset expectations ahead of data readouts.

Zacks' Neutral Rank vs. Pipeline Potential: A Contrarian Opportunity

Zacks Investment Research currently assigns Viking a “Sell” rank (#4), citing near-term EPS declines (projected -$0.44 in Q2 2025, a 120% drop year-over-year) and a lackluster 83rd percentile industry rank. Yet this rating overlooks the asymmetric risk-reward profile of early-stage biotechs.

The biotech sector is on a tear, with the S&P 500 Biotechnology Index up 35% year-to-date, driven by breakthroughs in gene therapies and oncology. Viking, however, has underperformed, rising just 0.04% over the past month versus the sector's 3.5% gain. This disconnect creates an opportunity:

• Risk-Adjusted Upside: A positive Phase 2 readout could propel VKTX's valuation toward peers like Arena Pharmaceuticals (ARNA) or Rhythm Pharmaceuticals (RYTM), which trade at 10–15x sales.
• Competitor Setbacks: Pfizer's danuglipron failure and Novo's focus on injectables reduce near-term competition, clearing the path for an oral winner like VK2735.
• Cash Position: Viking's $852 million in cash (as of Q1 2025) ensures runway through pivotal trials, reducing dilution risks.

Investment Thesis: Buy the Dip Ahead of Data

Viking's stock faces headwinds from its neutral Zacks rating and short-term losses, but these are outweighed by its long-term potential. The company is executing flawlessly—Phase 3 subcutaneous trials are underway, and the oral formulation's enrollment is complete. With Pfizer's stumble and Novo's dominance in injectables, an oral alternative like VK2735 could capture significant market share.

Investors should consider buying VKTX on dips below $10 (its current price as of June 2025). The risk-reward is compelling:

• Upside Case: Positive Phase 2 data lifts the stock to $18–$20, reflecting a valuation in line with peers.
• Downside Case: A negative readout could test $6–$7, but this scenario already factors in limited catalysts.

Conclusion: A High-Reward, Event-Driven Play

Viking Therapeutics is a classic “binary event” stock. Its near-term catalysts—Phase 2 data, investor conferences, and Phase 3 progress—offer a clear path to revaluation. While Zacks' neutral rank reflects short-term earnings pressures, the pipeline's potential and competitor missteps argue for a long position. For investors willing to endure volatility, Viking's undervalued shares could be a multi-bagger if its oral obesity drug delivers as expected.

Investment Advice: Accumulate Viking Therapeutics (VKTX) at current levels, with a $10 entry price and a $20 target. Set a stop-loss at $6 to manage risk. The next six months will be pivotal—data is the ultimate decider.

This analysis is for informational purposes only and should not be construed as financial advice. Always consult a licensed professional before making investment decisions.