Viking Therapeutics Gains as Pfizer Exits Obesity Race

Viking Therapeutics saw a significant boost in its share price following news that pharmaceutical giant Pfizer has discontinued development of its oral obesity candidate, danuglipron. This development has reshaped the competitive landscape in the obesity treatment market, potentially opening new opportunities for smaller biotechs.

Pfizer's Setback and Viking's Opportunity

Pfizer's decision to halt development of danuglipron came after a trial participant showed signs of liver injury. This setback leaves Pfizer with only one early-stage asset in its obesity pipeline, prompting speculation about potential acquisitions to bolster its position in this lucrative market.

Viking's oral obesity asset, VK2735, is now under increased scrutiny as a potential frontrunner in the race to develop effective oral treatments for obesity. William Blair analysts noted, "Viking's VK2735 could offer Pfizer a rare opportunity to reestablish not only a mere presence in obesity, but also a leading position beyond the current Novo Nordisk–Eli Lilly duopoly."

Market Dynamics and Future Prospects

Despite the recent rally, Viking Therapeutics' stock remains down 37% year-to-date and 66% over the past six months. The obesity treatment sector as a whole has faced challenges, with obesity-focused stocks losing between 40% to 80% of their value.

Viking is currently conducting the Phase II VENTURE trial for the oral formulation of VK2735, with results expected in the second half of this year. Additionally, the company plans to initiate a Phase III trial for the subcutaneous formulation in the second quarter of 2025.

The company has also made strategic moves to secure its manufacturing capabilities, signing a deal with CordenPharma to produce "multiple metric tons" of VK2735 annually in both oral and subcutaneous formulations.

Competitive Landscape and Industry Trends

While Viking's prospects have improved, the obesity treatment market remains highly competitive. Zealand Pharma, another player in this space, has four drugs in development and recently secured a partnership with Roche worth up to $5.3 billion.

Structure Therapeutics and Terns Pharmaceuticals are also developing oral GLP-1 receptor agonists, with the latter's TERN-601 showing promising results in early trials.

As the obesity treatment market continues to evolve, pharmaceutical companies are increasingly looking to China for new assets and partnerships. However, this trend, along with potential tariff threats, has contributed to investor uncertainty in the sector.