Why Viking Therapeutics stock took a hit on Tuesday

News from a deep-pocketed rival hurt the biotech Viking therapeuticshis (VKTX -6.27%) stock on Tuesday. Said rival seems determined to dominate a very hot therapeutic area these days, and it might be hard for a relatively small fry like Viking to compete. Amid such worries, investors sold the biotech, sending its share price down more than 6% during the trading session. That was a good day for stocks in general, with S&P 500 the index increases by 0.2%.

A discount offer stirs up the obesity drug segment

That huge competitor is Eli Lilly (LLY 0.42%)which announced Tuesday that its weight-loss drug Zepbound will be made available to patients in single-dose vials containing either 2.5 milligrams or 5 milligrams of the product. According to the pharmaceutical giant, the price of these new offerings is at least 50% cheaper than that of competing GLP-1 obesity treatments.

“This new option helps millions of adults with obesity access the medications they need, including those who are ineligible for the Zepbound Savings Card program, those without employer coverage, and those who must pay for themselves without insurance said Eli Lilly. press release presenting the new doses.

This affects Viking as the biotech nears the final stages of developing its own weight loss drug. This will soon be put into practice in a phase 3 clinical trial.

The right products for the right market

Because GLP-1 drugs offer the tantalizing possibility of weight loss without exercise, they have become extremely popular in the US — a country with many overweight people. There are very few approved obesity drugs on the market, hence Eli Lilly’s clear attempts to establish an early foothold in the segment. Viking certainly has its work cut out for it if and when its weight loss products hit drugstore shelves.