Why Viking Therapeutics and Roche Holdings Popped Today, but Novo Nordisk Stock Dropped

Core Viewpoint - The GLP-1 weight-loss drug market is experiencing significant developments, with Viking Therapeutics and Roche Holdings making strides, while Novo Nordisk faces challenges due to increased competition [1][2]. Group 1: Market Developments - Viking Therapeutics and Roche Holdings have seen stock increases of 11.3% and 4%, respectively, while Novo Nordisk's stock has decreased by 4.9% [1]. - There are currently four branded GLP-1 weight-loss drugs on the market, with Novo Nordisk holding two and Eli Lilly holding the other two [2]. Group 2: Company Agreements and Collaborations - Viking signed a broad manufacturing agreement with CordenPharma to produce a multi-ton annual supply of its VK2735 GLP-1 weight-loss drug, which is still in clinical trials [3]. - This agreement positions Viking for a potential multibillion-dollar annual product opportunity, indicating significant future sales that could impact Novo Nordisk and Eli Lilly [3]. - Roche announced an exclusive collaboration with Zealand Pharma to co-develop and commercialize petrelintide, a drug that mimics a naturally occurring hormone to aid weight loss [4][6]. Group 3: Competitive Landscape - Both petrelintide and Roche's CT-388 are still in clinical trials, but Roche's collaboration indicates a strong intent to compete in the GLP-1 market [6]. - Roche has also made strategic hires, including poaching a vice president from Novo Nordisk, which may enhance its competitive positioning [7]. Group 4: Investment Considerations - Despite the promise of Viking's and Roche's drugs, neither is currently on the market, and their success will depend on their effectiveness and pricing compared to established competitors [9]. - Roche's stock is trading at nearly 29 times earnings, with a modest growth rate, raising concerns about its valuation [10]. - Viking is not yet profitable and is not expected to achieve pro forma profits before 2029, making it a speculative investment [11]. - Investors are left with two main options: Eli Lilly, trading at 70 times earnings, and Novo Nordisk, trading at less than 24 times earnings, with the latter offering a more attractive valuation [12].