Viking Therapeutics (VKTX) announced successful top-line results for the Phase 2 clinical trial of its new obesity drug on Tuesday, and immediately saw its stock plummet 42%.
The clinical trial for the oral tablet formulation of its VK2735 drug found that patients on the highest dose (120 mg) of the drug lost up to 12.2% of their body weight (26.6 lbs) after 13 weeks of daily dosing, compared with 1.3% in the placebo group.
The company said that the Phase 2 VENTURE-Oral Dosing trial successfully achieved its primary and secondary endpoints since patients receiving VK2735 demonstrated statistically significant reductions in body weight compared with placebo.
"As in prior studies we observed a clear dose response and impressive weight loss across the 13-week treatment period,” Brian Lian, Ph.D. and CEO of Viking, said in a statement. “The progressive nature of the weight loss curves suggests the potential for further improvement with longer dosing periods.”
However, Viking also reported that a higher number of patients discontinued the treatment than had been expected because of adverse reactions to VK2735.
The company noted that 28% of participants being treated by VK2735 dropped out, compared with 18% for the placebo.
The most common reasons for treatment discontinuation were gastrointestinal (GI)-related adverse events.
Investors were clearly concerned by the number of patients who dropped out of the study as it raises questions about the drug’s tolerability.
This led to the steep sell-off after Viking released its findings.
But Wall Street analysts seem to be much less concerned about this issue than investors.
William Blair analyst Andy Hsieh was impressed that Viking “met the lofty goals of achieving 10%-11% weight loss on a placebo-adjusted basis at week 13,” while also noting that “investors were concerned about the tolerability profile and the higher rates of discontinuation.”
But Hsieh called the selloff “extreme and unwarranted,” expressing confidence that the tolerability can be improved “when the titration step-up is expanded to four weeks as opposed to two weeks in VENTURE- Oral.”
He reiterated an Outperform rating and maintained a $24.88 price target.
J.P. Morgan analyst Hardik Parikh acknowledged that the tolerability was “worse than we expected,” especially when compared to Phase 1 of the study, but added that “we expect the company to address this through further/optimized titration.”
Parikh was impressed by the weight-loss results of VK2735, which “we think is very strong compared with other orals in development.”
He reiterated his Overweight rating and maintained a price target of $42.
Jeffries analyst Roger Song reiterated his Buy rating and maintained a $101 price target, while arguing that “we think the market is overreacting on GI AE/ discontinuation profile, underappreciating that it could be modulated by dosing optimization (*start low, 90 slow* strategy).”
He added that “oral VK2735 demonstrated robust efficacy, including superior weight loss at upper dose.”
Viking’s stock has now dropped 36.2% following the market selloff.
Your email address will not be published. Required fields are markedmarked