JPMorgan has reset the valuation for Viking Therapeutics Inc. (NASDAQ:VKTX) and Structure Therapeutics Inc. (NASDAQ:GPCR).

Analyst Hardik Parikh cites several reasons for recovery, including pathways for strategic partnership with pharma, some clinical trial data points and additional clarity on the incoming administration's policies on GLP-1 access.

The analyst writes that Viking Therapeutics and Structure Therapeutics are attractive pure-play options for investing in the T2D/obesity market opportunity overall.

The note continues, saying that Viking Therapeutics and Structure Therapeutics remain attractive partners for pharmaceutical companies looking to enter the T2D/obesity market relatively quickly.

It expects a reasonable case to make that many pharmaceutical companies, in addition to Merck & Co. Inc (NYSE:MRK), could be active in the space. Hence, Viking Therapeutics and Structure Therapeutics still have abundant pathways to strategic partnerships.

Viking Therapeutics and Structure Therapeutics can help address growth gaps for pharma over time, analyst Parikh says, and sees an apparent disconnect on valuation abates over time.

The analyst sees the competitive bar for VK2735 primarily unchanged, at least in the near term, after Novo Nordisk A/S' (NYSE:NVO) phase 3 Redefine-1 data showed weight loss from cagriSema that is on par with Eli Lilly And Co.'s (NYSE:LLY) Zepbound.

The Street broadly expected the Redefine-1 trial of CagriSema to show ~25% weight loss, raising the benchmark injectables in development.

Viking Therapeutics highlighted new clinical data from its VK2735 obesity program in two poster presentations at ObesityWeek 2024.

Cohorts receiving VK2735 demonstrated dose-dependent reductions in mean body weight from baseline, ranging up to 8.2%.

JPMorgan suggests that VK2735's weight-loss effectiveness in its upcoming Phase 3 trial (starting in early 2025) could slightly surpass Zepbound's ~22% reduction at 72 weeks and remain competitive with CagriSema.

However, the firm believes Eli Lilly's retatrutide may set the highest standard for efficacy, potentially achieving weight loss in the high 20% range, based on Phase 3 data expected in 2026. While this creates a challenging benchmark for VK2735, its tolerability could offer an edge over retatrutide, which is expected to have slightly more side effects than Zepbound.

Last month, Structure Therapeutics selected ACCG-2671 as its lead oral small molecule amylin receptor agonist for obesity and related diseases. The compound is expected to be in Phase 1 clinical development by the end of 2025.

In November, Structure Therapeutics dosed the first patient in Phase 2b ACCESS trial of GSBR-1290 obese or overweight patients with weight-related comorbidity.

VKTX, GCPR Price Actions: Viking Therapeutics stock is down 0.56% at $42.65, and Structure Therapeutics stock is down 0.25% at $27.51 at publication Monday.