Why Viking Therapeutics Stock Bumped 3% Higher Today

A major C-suite change at a potential competitor was a key factor behind the rise of Viking Therapeutics (NASDAQ: VKTX) stock on Friday, which closed the trading session 3% higher. That figure was well higher than the 0.7% increase of the benchmark S&P 500 index.

What's new at Novo

That rival is Novo Nordisk, which announced that its current CEO Lars Jørgensen is to vacate his position.

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This is the Denmark-based pharmaceutical company that vaulted to prominence earlier this decade when its Wegovy became the first GLP-1 drug approved for obesity by the U.S. Food and Drug Administration (FDA).

The European company is a potential competitor because, similarly, Viking has gained a degree of fame with its VK2735, an investigational weight-loss treatment. The medicine performed exceedingly well in phase 2 clinical testing, and hopes are high that it will not only win FDA approval ultimately, but will be a hot item in a hot market when commercialized.

A distraction at best

Of course, what happens at Novo Nordisk doesn't directly affect Viking's operations, most crucially its development activities. Still, any change in a company's leadership threatens to affect its business momentum, and the weight-loss drug segment is getting increasingly competitive. Even small stumbles, or poor personnel decisions, could mean loss of market share for the Danish pharmaceutical.

That said, the reaction with Viking stock seems a bit overdone, especially given that Novo Nordisk is quite a storied enterprise that will likely take care in replacing its CEO. Viking investors should be far more concerned with the progress of VK2735 than what's happening outside the company.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk and Viking Therapeutics. The Motley Fool has a disclosure policy.