Weight loss drug developers Novo Nordisk (NYSE: NVO) and Eli Lilly (NYSE: LLY) saw their stocks take a significant hit on Thursday. Novo Nordisk fell nearly 3%, while Eli Lilly dropped around 5%, following news of a formidable new competitor. In contrast, Roche Holdings (OTC
) experienced a 2.7% gain.
New Competitor Shakes Up the Market
The emerging threat comes from Viking Therapeutics, a clinical-stage biotech company. On Wednesday, Viking reported its second-quarter results and business update, which included a significant advancement in their investigational obesity drug, VK2735. The company announced plans to move VK2735 to a phase 3 clinical trial. Earlier this year, VK2735 showed a promising 15% reduction in body weight over 13 weeks in a phase 2 study, surpassing the clinical results of Novo Nordisk’s and Lilly’s current products.
Investor Excitement and Market Reactions
The announcement has generated excitement among investors, leading to a rise in Viking’s stock and a similar increase for Roche, which is also developing an obesity treatment. Last week, Roche reported positive early-phase results for its experimental drug, CT-996, which, unlike current injectable treatments, is administered as a once-daily pill.
Incumbents Hold Strategic Advantages
Despite these developments, Novo Nordisk and Eli Lilly maintain a strategic edge with their already FDA-approved and market-available products, Wegovy/Ozempic and Zepbound/Mounjaro, respectively. Novo Nordisk’s pioneering role and established market presence provide a significant first-mover advantage, making it challenging for new competitors to capture market share immediately.
Investment Considerations
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