Viking Therapeutics (VKTX): Is the Recent Volatility a Buy Opportunity or a Warning Sign?

The biotech sector has long been a theater of high-stakes gambles, where breakthroughs and setbacks can swing stock prices with dizzying speed. Viking Therapeutics (NASDAQ: VKTX) is no stranger to this volatility, but the recent mixed signals from its Phase 2 trial for VK2735—a dual agonist of GLP-1 and GIP receptors—have left investors torn. Is this the moment to bet on a company poised to disrupt the $100B oral weight-loss drug market, or a cautionary tale of overhyped potential?

Phase 2 Trial: Promising Efficacy, But Side Effects Lurk

Viking's Phase 2 VENTURE-Oral Dosing Trial delivered headline-grabbing results: participants on VK2735 achieved up to 12.2% weight loss over 13 weeks, with 97% achieving at least 5% reduction. The drug's oral formulation, which avoids the compliance challenges of injectables, showed progressive weight loss without plateauing. Even more compelling, the maintenance cohort demonstrated that lower doses (30 mg) could sustain results after initial high-dose treatment.

Yet, the trial also revealed risks. 58% of participants reported nausea, and 26% experienced vomiting, with gastrointestinal (GI) side effects peaking early. While most were mild to moderate, the discontinuation rate due to adverse events—though balanced against placebo—raises questions about long-term tolerability. For context, Eli Lilly's orforglipron, an oral GLP-1 agonist in Phase 3, has shown lower GI side effects, giving Viking a competitive hurdle to clear.

The $100B Market: A Gold Rush with Caveats

The global GLP-1/GIP agonist market is projected to grow from $20.86B in 2025 to $48.84B by 2030, driven by obesity's rising prevalence and demand for non-invasive treatments. Oral formulations, though still a small fraction of the market (parenterals dominate 92.7% in 2024), are gaining traction. Innovations like controlled-release tablets and dual agonists (e.g., Viking's VK2735) are addressing side effects and improving adherence.

However, the $100B figure is a moving target. Goldman Sachs recently revised its 2030 forecast to $95B, citing price erosion, insurance coverage constraints, and a segmented patient population. The U.S. market alone is now projected to peak at $70B, with international markets accounting for $50B. For Viking, this means the window to capture market share is narrowing, especially with Novo Nordisk and Eli Lilly already dominating injectable GLP-1s.

Viking's Long-Term Play: Pipeline and Strategic Flexibility

VK2735 is Viking's crown jewel, but it's not the only card in its deck. The company is also developing VK2809, a thyroid hormone receptor beta agonist for lipid disorders, and VK0214 for X-linked adrenoleukodystrophy (X-ALD), a rare genetic disease. This diversified pipeline could provide near-term revenue streams while VK2735 navigates regulatory hurdles.

The Phase 3 VANQUISH-1 and VANQUISH-2 trials for subcutaneous VK2735 are critical. Success there could validate the drug's mechanism and pave the way for the oral formulation's approval. Viking's CEO, Brian Lian, has emphasized the potential for transitioning patients from high-dose injectables to low-dose oral maintenance—a strategy that could differentiate VK2735 in a crowded market.

Risks and Realities: A Balancing Act

The recent midstage trial results—while positive—highlight Viking's vulnerabilities. The higher discontinuation rate compared to competitors like orforglipron could limit adoption, especially in a market where patient retention is key. Additionally, Viking's reliance on a single asset (VK2735) exposes it to clinical and commercial risks.

The broader market is also evolving. Novo Nordisk's Rybelsus (oral semaglutide) and Eli Lilly's orforglipron are already in late-stage trials, with potential approvals looming. Viking's oral formulation must demonstrate not just efficacy but superior tolerability to stand out.

Investment Thesis: A High-Risk, High-Reward Proposition

Viking's stock has been volatile, with a recent dip following mixed trial data. For risk-tolerant investors, this could represent an entry point if the company can address side effects and secure Phase 3 success. The long-term potential of the oral GLP-1/GIP market—projected to grow at 18.54% CAGR—offers a compelling backdrop.

However, the path to profitability is fraught. Viking's market cap of ~$2.5B (as of August 2025) reflects both optimism and skepticism. A successful Phase 3 trial could justify a re-rating, but failure would likely trigger a sharp decline. Investors should monitor VKTX's cash reserves and trial timelines while keeping an eye on competitors' progress.

Conclusion: Navigating the Crossroads

Viking Therapeutics stands at a crossroads. The Phase 2 results for VK2735 underscore its potential to disrupt the oral weight-loss market, but the risks—clinical, competitive, and regulatory—are substantial. For investors, the key question is whether the company can refine its drug's tolerability profile and secure a meaningful share of the $100B market.

If Viking can navigate these challenges, it may emerge as a key player in a transformative sector. But for now, the stock remains a high-stakes bet, best suited for those with a long-term horizon and a tolerance for volatility. As the obesity drug landscape evolves, VKTX's success will hinge on its ability to balance innovation with execution.