Viking Therapeutics selloff on Zepbound news an opportunity, says Truist

After Eli Lilly (LLY) announced plans to sell their blockbuster Zepbound weight loss drug directly to patients through LillyDirect in a vial form, not auto-injector, at steep discounts of at least 50% from the list price, Truist said the strategic move appears to be a direct response to the proliferation of compounded GLP1s being sold by companies such as Hims & Hers (HIMS), Ro Pharma and others. Viking Therapeutics (VKTX) is off about 10% intraday, which the firm views as likely based on news from Lilly this morning, but it thinks this is an opportunity to add as it thinks the update today implies the unmet need is greater than previously thought and sees “no reason” why other branded GLP1 manufacturers couldn’t also pursue a similar commercial strategy given such high demand that patients are willing to pay out of pocket. The firm, which argues that the commercial outlook for VK2735 is incrementally positive on read-through from Lilly’s update, reiterates a Buy rating on Viking and recommends investors take advantage of today’s selloff to add shares.