Here's Why VKTX Stock Plummeted 18% on Wednesday

Company Overview - Viking Therapeutics (VKTX) shares fell 18% following Merck's announcement of entering the obesity market through a licensing deal with Hansoh Pharma for a weight-loss drug [1][5] - Merck secured exclusive rights to develop and market HS-10535, a preclinical oral small-molecule GLP-1 receptor agonist targeting metabolic disorders, including obesity, with an upfront payment of $112 million and potential milestone payments of up to $1.9 billion [2][6] Competitive Landscape - Merck's entry into the obesity space is perceived as a significant competitive threat to smaller biotech firms like Viking, which has been developing VK2735, a dual GLP-1 and GIP receptor agonist for obesity treatment [4][5] - The likelihood of Merck acquiring smaller companies like Viking has decreased, diminishing Viking's speculative value as a takeover target [6] Market Dynamics - The obesity market is projected to reach $100 billion in the United States by 2030, with major players like Eli Lilly and Novo Nordisk leading the market with their drugs Zepbound and Wegovy [12] - Other companies, including Amgen and Roche, are also making strides in the obesity drug development space, with Amgen reporting significant weight loss results from its GLP-1 therapy MariTide [13][14] Development Pipeline - VK2735 has shown promising results in clinical studies, with patients losing up to 8.2% of body weight after 28 days of treatment [9] - Viking plans to meet with the FDA before the end of 2024 to discuss late-stage study designs for VK2735 and intends to file an IND application for a new obesity drug candidate next year [10][11]