Viking seen ‘holding up’ against obesity competition as Roche presents data

Shares of Viking Therapeutics (VKTX) are in the spotlight on Thursday after Roche (RHHBY) announced results from Genentech’s Phase Ib clinical trial of CT-388, a dual GLP-1/GIP receptor agonist being developed for the treatment of obesity and type 2 diabetes. While acknowledging that the data is “impressive,” Truist believes it falls short of the efficacy Viking’s VK2735 reported in the Phase 2 VENTURE study.

Also bullish on Viking, Raymond James upgraded the stock to Strong Buy as VK2735 “appears to be holding up against the biggest competitive overhang” following the data reported by Roche. The market, however, seems more cautious, with Viking’s shares sliding following the competitor’s results.

TRIAL RESULTS: Genentech, a member of Roche, announced results from the Phase Ib clinical trial of CT-388, a dual GLP-1/GIP receptor agonist being developed for the treatment of obesity and type 2 diabetes. The study found that a once-weekly subcutaneous injection of CT-388 over 24 weeks resulted in significant weight loss in healthy adults with obesity compared to placebo. The weight loss achieved with CT-388 was clinically meaningful, with a mean placebo-adjusted weight loss of 18.8%. At week 24, 100% of CT-388 treated participants achieved a weight loss of greater than 5%, 85% achieved greater than 10%, 70% achieved greater than 15%, and 45% achieved greater than 20%.

The treatment was well tolerated, with mild to moderate gastrointestinal-related adverse events being the most common, consistent with the incretin class of medicines that CT-388 belongs to. All participants with a pre-diabetes status at baseline became normoglycemic after 24 weeks of CT-388 treatment, whereas glycemic status of participants treated with placebo remained largely unchanged during this period. An additional cohort from the ongoing placebo-controlled Phase Ib trial of CT-388 will evaluate obese patients with type 2 diabetes over a 12-week treatment duration. Roche expects data from this additional cohort in the second half of 2024.

‘OPAQUE’ COMPETITOR UPDATE: Raymond James upgraded Viking Therapeutics to Strong Buy from Outperform with a price target of $116, up from $115, after Roche released “a few datapoints” for its subcutaneous weekly GLP-1/GIP asset CT-388, which the firm views as the “closest competition” for Viking. Roche “has made it as difficult as possible” to compare CT-388 to VK2735, Raymond James tells investors. The firm models about 19.8% unadjusted weight loss at week 24 for VK2735 if treated with a flat 15mg dose from week 13 onward, and contends that VK2735 “appears to be holding up against the biggest competitive overhang” following the data reported by Roche.

BOTH BETTER THAN LILLY’S: Truist keeps a Buy rating on Viking Therapeutics with a $120 price target after Roche disclosed that its CT-388 dual agonist drove mean placebo-adjusted weight loss of 18.8% over 24 weeks. The data is “impressive” but falls short of efficacy Viking’s VK2735 reported in the Phase 2 VENTURE, the firm tells investors in a research note. Truist says that caveats of cross-trial comparisons notwithstanding, the slope of weight loss with VK2735 looks steeper and likely to exceed weight loss reported by CT-388 at later time points. However, both appear to be significantly better than Zepbound, or tirzepatide, the current market leader from Eli Lilly (LLY), adds Truist. It continues to view VK2735 as the better drug and possibly best-in-class.

PRICE ACTION: In afternoon trading, shares of Viking have dropped almost 10% to $70.26.