Generally, when investors are looking for growth, they turn to industries like technology. Here, revenues may rise in double or even triple digits, leading to explosive stock performance. But in recent years, a unique area of the pharmaceutical market has presented such an opportunity. And it’s in the weight loss drug space.
just now, Eli Lilly (LLY 1.64%) It leads the market New Nordisk In second place, but several pharma and biotech players are knocking on the door — and may be one of the first to enter Viking therapy (VKTX 6.39%). The company is studying its candidate in two different forms in Phase 2 and Phase 3 trials, and so far, the results are strong.
So, right now, if you could only buy one weight loss pill, which one should you choose: Lilly or Viking? Let’s find out.
Image source: Getty Images.
The case for Eli Lilly
Eli Lilly was not actually the first to market GLP-1 drugs. Novo Nordisk led the way, gaining approval of Ozempic for type 2 diabetes in 2017. Doctors prescribed the injectable off-label for weight loss, and that prevented the rush of patients to the GLP-1 drug — and the rush of investors to GLP-1 stock.
Lilly entered the market with Terzapatide, commercialized in Monjaro for type 2 diabetes and Zip-Bound weight loss, shortly after Nov., and began to gain market share. The new entrants focused on investing in production capacity to meet demand, and head-to-head studies showed that Lilly’s drug lost more weight than the new ones. These elements have helped Lilly surge ahead in the US market — it now has a 60% share.
Although Novo was the first to launch a weight-loss drug in pill form late last year, Lilly’s oral candidate may soon hit the market — it’s currently under regulatory review.
Today’s change
((-1.64%) $-15.27
current price
dollar915.08
Important information points
Market cap
$879B
The range of the day
dollar905.19 – Dollars928.87
52wk range
dollar623.78 – Dollars1133.95
Volume
101K
Average volume
3.1M
Gross margin
83.04%
Dividend yield
0.67%
The case for Viking therapy
Viking Pharmaceuticals is set to submit its candidate VK2735 in an oral form to a Phase 3 trial in the third quarter, and a Phase 3 study of the candidate in an injectable form is underway. The drug works like Lilly and the new drugs, stimulating hormonal pathways involved in appetite control and blood sugar level management.
It is often difficult to directly compare performance against each other, unless a head-to-head study is performed, because trial designs vary. But Viking’s performance in the tests was strong, suggesting it could easily compete with Lilly and the new drugs.
It’s also important to keep in mind that demand for weight loss drugs is high, and in some cases, it’s even outstripping supply, so there’s plenty of room for Viking to make a contribution if the candidate successfully completes trials and wins regulatory approval.
The biotech company also has another attractive candidate in the pipeline, one that acts on amylin and calcitonin receptors. (It plays an important role in metabolism.)
Today’s change
((-6.39%) $-2.27
current price
dollar33.26
Important information points
Market cap
$4.1B
The range of the day
dollar33.26 – dollars35.10
52wk range
dollar18.92 – Dollars43.15
Volume
39K
Average volume
3M
Which is the best buy?
Both Lilly and Viking are great buys today and could have a bright future in the weight loss drug market. Although Viking has yet to commercialize a product, Lilly is already generating significant growth from terzapatide. Monjaro and Zipbound each saw revenue rise by triple digits in the most recent quarter.
Lilly’s stock has fallen about 8% so far this year, and it now trades at 28x forward earnings estimates, down from 31x just a few weeks ago.
We can’t see Viking using this metric because the company doesn’t have products on the market yet. But the stock is up about 2% this year and up about 16% over the past year.
So, Lilly offers a window of opportunity right now. It’s also important to note that regulators may decide whether to approve Lilly’s oral weight loss drug in the coming weeks, and that could act as a catalyst for the stock. All of this means that now may be a great time to buy shares of this weight loss drug leader.
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