Shares of Viking Therapeutics (NASDAQ: VKTX) were plunging 17.4% lower as of 11:52 a.m. ET on Thursday. This decline wasn’t caused by an announcement by Viking. Instead, the sell-off appears to be related to Novo Nordisk (NYSE: NVO) reporting results from a phase 1 study evaluating its experimental oral obesity drug amycretin.
Why was Novo Nordisk’s good news potentially bad news for Viking?
Novo Nordisk revealed in an investor meeting on Thursday that patients receiving amycretin in its early-stage trial achieved an average weight loss of 13.1% after 12 weeks. This improvement matches the placebo-adjusted mean weight loss achieved by Viking’s experimental obesity drug VK2735 in a phase 2 study. Viking announced those results last week.
Investors perceived Novo Nordisk’s good news as potentially bad news for Viking. Why? VK2735 is administered subcutaneously, whereas amycretin is a pill. With similar efficacy results and greater convenience for patients, Novo Nordisk’s drug could steal the thunder from VK2735.
Is Viking Therapeutics stock a buy on the dip?
Risk-averse investors will be better off staying away from Viking. However, I think that the biotech stock could be a buy on the dip for aggressive investors.
It’s important to remember that Novo Nordisk’s results were only from an early-stage study. We don’t know yet how amycretin will stack up against VK2735 and other obesity drugs on safety. My view is that the obesity market will be big enough for multiple winners.
Also, VK2735 isn’t Viking’s only promising pipeline candidate. The company is also evaluating VK2809 in a phase 2 clinical study targeting nonalcoholic steatohepatitis (NASH). There’s a huge opportunity for safe and effective NASH therapies.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
Why Viking Therapeutics Stock Is Plunging Today was originally published by The Motley Fool
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