Why Viking Therapeutics Stock Plummeted After Soaring Today

For high-profile biotech Viking Therapeutics (NASDAQ: VKTX), Monday was very much a good news/bad news kind of day. The company reported quite encouraging clinical results from a version of its investigational weight-loss drug. Before long, however, this was overshadowed by promising news from rival developers of similar treatments.

Ultimately, after an early surge, Viking's shares closed the day more than 13% lower in price.

Weight loss for profit gain

Viking presented those results at ObesityWeek, the annual meeting of scientific interest group the Obesity Society. Its presentations of that weight loss drug, VK2735, revealed that patients administered the highest dose of the drug in pill form lost over 8% of their body weight over a four-week period. This compared very favorably to the 1.4% recorded by patients taking a placebo, and also topped analyst expectations of 5% to 6%.

Investors had been particularly interested in the VK2735 pill because the leading Food and Drug Administration (FDA) GLP-1 drugs approved for obesity are administered via injection. Specifically, these are Novo Nordisk's Wegovy and Eli Lilly's Zepbound.

Yet Viking's happy news was quickly overshadowed at the event by progress reported by other weight-loss drug developers.

In its own presentation at the event, global pharmaceutical company AstraZeneca revealed that patients with type 2 diabetes who took the company's investigational drug saw a nearly 6% weight reduction. Meanwhile, Corbus Pharmaceuticals said that mice administered the highest dose of its pipeline drug experienced a weight reduction of over 31%.

Still on the right track

With these presentations, it's abundantly clear the obesity drug gold rush is only intensifying. The sky-high demand for weight loss drugs -- particularly in obesity-heavy America -- combined with the few advanced products currently available, make for quite the opportunity. Investors shouldn't get discouraged about this mounting competition for Viking, as the biotech clearly has an efficacious drug and is well advanced in developing it for commercialization.

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