Elie Lilly (LLY -3.15%) sells a wide range of pharmaceutical products treating a variety of illnesses, but one portfolio in particular has helped its profits and shares rise lately. It includes the company’s weight loss drugs: Mounjaro, approved for type 2 diabetes but also prescribed off-label for weight control, and Zepbound, specifically approved for the weight control indication.

These drugs, both GIP/GLP-1 receptor agonists, work by affecting hormones involved in the digestion process and, therefore, help control blood sugar and appetite. Lilly and its great pharmaceutical rival Novo Nordisk today dominate the weight-loss drug market, but competition could be on the horizon.

In fact, one up-and-coming actor is attracting a lot of attention these days, thanks to his fantastic clinical trial results. And its first weight-loss candidate could soon launch Phase 3 trials, the final stage of development before regulatory review. I’m talking about Viking Therapeutics (VKTX -2.71%).

Should we forget Eli Lilly and buy this magnificent biotechnology instead? Let’s find out.

Image source: Getty Images.

Viking Clinical Trial Results

Viking’s candidate, like Lilly’s drugs, is a dual GIP/GLP-1 receptor agonist. Like Mounjaro and Zepbound, VK2735 is administered by injection. In a Phase 2 study, VK2735 met all primary and secondary endpoints and resulted in an average weight reduction of up to 14.7% after 13 weeks. The company plans a meeting with regulators this quarter to prepare for a phase 3 trial.

Viking recently stood out during Obesity Week, an annual event highlighting advances in weight loss, by talking about its oral formulation of VK2735. In a phase 1 trial, the candidate showed a reduction in average body weight of up to 8.2% after just 28 days – and, more importantly, it was well tolerated even at the highest dose of 100 mg per day. A pill format could be a game-changer because it makes drug administration easier and more convenient for patients.

Now consider Viking’s chances of winning in the weight loss market, taking into account the strength of the current leaders. It is true that these large pharmaceutical companies have first-to-market advantage and have the resources to support advertising and manufacturing as well as the development of new candidates.

Speaking of new candidates, Lilly is also working on an oral weight loss drug – and Lilly’s candidate is involved in Phase 3 trials. So, if all goes well, it should hit the market before Viking.

I wouldn’t consider Viking or other new players a threat to today’s leaders. That said, given the demand in this market and growth forecasts, there is room for more than a few players to succeed in this space. Demand for weight-loss drugs over the past two years has placed Lilly and Novo Nordisk’s drugs on the U.S. Food and Drug Administration’s drug shortage list – and prompted both companies to increase their investments in manufacturing capacity.

As for growth, the obesity drug market could reach $130 billion by the end of the decade, according to Goldman Sachs Research. That’s up from Goldman’s earlier forecast of $100 billion.

The possibilities of Viking

All of this means that Viking Therapeutics, even though it enters the market much later than its big pharma rivals, could still carve out a share of the market. And a company of its size — with a market value of $6.7 billion compared to Lilly’s $777 billion – could achieve great success even with a much smaller obesity drug market share than the pharmaceutical giants. Viking can also score a win for investors if it partners with another player or agrees to a buyout. Many industry players are eager to enter the weight loss drug market, and Viking has a very promising pipeline.

Now back to our question: should you forget about Lilly and go for this exciting biotech stock? It depends on your risk tolerance. If you’re a conservative investor, you’re better off sticking with Lilly: it offers a strong profit track record, the security of a broad product portfolio, and passive income through payment of dividends.

However, if you can handle some risk and are looking to add an aggressive growth stock to your portfolio, you might favor Viking. We know that the stock has soared thanks to positive data from its weight loss program, and since we are only at the beginning of this story, many catalysts await us.