Here's Why Shares in Viking Therapeutics Crashed This Week

Key Points

• Disappointing tolerability results accompanied impressive body weight loss data.

• It's a setback, but Viking Therapeutics still has strategic options.

• The trial may have contained a tough sample group.

• 10 stocks we like better than Viking Therapeutics ›

Shares in Viking Therapeutics (NASDAQ: VKTX) crashed by 35.9% in the week to Friday morning. The decline comes in a week when the company released its top-line results from its phase 2 trial of its lead drug VK2735 (oral dosing) for weight loss. A successful oral formulation could be of substantive value due to the convenience and ease of use of an oral formulation compared to a subcutaneous (injected) formulation.

What went wrong

Unfortunately, the phase 2 results were mixed. On the one hand, the body weight reductions were comparable to Eli Lilly's phase 3 trial for orforglipron (oral), with VK2735 achieving a decrease of mean body weight of 12.2% at the highest dosage compared to a 12.4% reduction at the highest dosage for orforglipron.

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However, there were tolerability issues, with 20% of patients on VK2735 dropping out due to adverse effects. This compares unfavorably to a discontinuation rate of 10.3% at the highest dosage for orforglipron. It is also at odds with the phase 1 results for VK2735 (oral), whereby "no clinically meaningful differences" were reported for adverse effects between treated patients and the placebo group.

What it means to investors

Clinical trials can yield unusual results. Purely by way of illustration, readers should note that treatment discontinuation rates due to adverse effects in the placebo group were 2.6% in the Eli Lilly phase 3, compared to 13% in the placebo group in the Viking phase 2 trial. Whether this implies something about the patient sampling in the trials is open to question.

Image source: Getty Images.

Although the results are disappointing, Viking can work on optimizing the dose and consider taking VK2735 (oral) through phase 3. Alternatively, outside of an outright bid for the company, it can partner with a larger pharmaceutical company to achieve this goal.

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.