Viking Therapeutics Shares Surge 12% Due to Issues in Novo Nordisk's Trial Results

Investing.com -- Viking Therapeutics (NASDAQ: VKTX) shares rose by 12% following disappointing results from Novo Nordisk's (NYSE: NVO) obesity drug trial. Novo's stock experienced a sharp decline after the company announced that its experimental obesity drug CagriSema resulted in less weight loss than expected. This situation caused a significant loss in the company's market value while benefiting competitors in the sector.

Shares of Eli Lilly & Co. (NYSE: LLY), Amgen (NASDAQ: AMGN), and Structure Therapeutics (NASDAQ: GPCR) also increased by 5%, 2.2%, and 6%, respectively. Investors shifted their attention to these companies in light of Novo's setback. According to data released last Friday, Novo's CagriSema drug helped patients lose an average of 22.7% of their weight over 68 weeks. This figure fell short of the anticipated 25% weight loss.

Jefferies analyst Peter Welford commented on the situation, stating that “most investors were expecting a weight loss between 25% and 27%,” suggesting that the actual results raised "tolerance concerns" for patients. Welford also noted that market expectations for CagriSema sales were "overly optimistic."

The negative results for Novo Nordisk had a domino effect throughout the sector. Stocks of smaller weight loss drug manufacturers and medical packaging companies in Europe experienced declines. However, in pre-market trading in the U.S., shares of Eli Lilly, Viking Therapeutics, and other obesity drug rivals gained value.

Novo Nordisk's trial results were part of the REDEFINE 1 study, which included 3,417 randomized individuals. This study aimed to compare the efficacy and safety of CagriSema against the individual components of the drug and placebo. The trial reached its primary endpoint by demonstrating that CagriSema provided significantly more weight loss compared to placebo, but the results did not meet the high expectations set by the company and investors.

The trial's outcome has led to a reassessment of the competitive landscape in the obesity drug market. Viking Therapeutics and other companies could potentially benefit from Novo's clinical trial results. The market's reaction to these developments highlights the high risks and volatility associated with the development and commercialization of new pharmaceutical treatments.