Why Viking Therapeutics Stock Got Thrashed on Tuesday

News from a deep-pocketed rival put the hurt on biotech Viking Therapeutics 's (NASDAQ: VKTX) stock on Tuesday. Said rival seems determined to dominate a very hot therapeutic area these days, and it might be tough for a relatively small fry like Viking to compete. On the back of such worries, investors sold out of the biotech, sending its share price down by more than 6% across the trading session. That was on a good day for stocks, generally, with the S&P 500 index inching up by 0.2%.

A discount offering rocks the obesity drugs segment

That giant competitor is Eli Lilly (NYSE: LLY) , which on Tuesday announced that its Zepbound weight loss drug would 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 for these new offerings is at least 50% cheaper than that of competing GLP-1 treatments for obesity.

"This new option helps millions of adults with obesity access the medicine they need, including those not eligible for the Zepbound savings card program, those without employer coverage, and those who need to self-pay outside of insurance," Eli Lilly said in the press release touting the new dosages.

This affects Viking because the biotech is approaching the final stages of development of its own weight-loss drug. This will soon be put through its paces in a phase 3 clinical trial.

The right products for the right market

As GLP-1 drugs offer the tantalizing possibility of weight loss without exercise, they have become wildly popular in the U.S. -- a country with a great many overweight individuals. There are very few approved obesity drugs on the market, hence Eli Lilly's clear attempts at establishing an early toehold in the segment. Viking certainly has its work cut out for it if and when its own weight loss products make it to pharmacy shelves.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .