Weight-Loss Drugs Enter Their “Unmasking” Year

In 2025, the question at the forefront of investors’ minds is clear: what is the true valuation of a weight-loss drug company? Over the past two years, weight-loss medications have dominated the global pharmaceutical arena, with competition around first-generation GLP-1 therapies reaching a fever pitch and an arms race already underway to develop next-generation treatments. Oral small-molecule GLP-1 candidates, prized for their cost efficiency and patient convenience, have attracted particularly intense interest. Merck’s December deal to license a preclinical oral GLP-1 from Hansoh Pharmaceutical for a USD 112 million upfront fee, with potential milestones of up to USD 1.9 billion, exemplifies the sector’s capital fervor.

The buzz intensified earlier this year when Metsera, the first U.S.-listed weight-loss biotech, saw its share price jump nearly 50 percent on its debut, pushing its market capitalization past USD 3.4 billion just three years after founding. Yet as clinical trials expand in size and duration, the limitations of these therapies have come into sharper focus. Adverse events have emerged more frequently, and efficacy gains have begun to taper off, triggering steep declines even among leading developers.

Since August, shares of Viking and Eli Lilly tumbled following late-stage setbacks in their respective small-molecule GLP-1 programs, while Pfizer opted to discontinue a candidate that had cleared Phase 1. Although variability is an inherent risk in drug development, weight-loss therapies have been cast in a miracle-drug light, leaving no margin for misstep. In 2025, the industry is undergoing a rigorous “unmasking” of early-stage promise.

Viking’s VK2735 illustrates this shift. In February 2024, Phase 2 data showed up to 13.1 percent weight loss over 13 weeks—surpassing oral semaglutide and sending the stock soaring. When larger Phase 3 results arrived on August 19, 2025, the high-dose cohort averaged 12.2 percent weight loss, but 38 percent of participants withdrew due to side effects. Moreover, VK2735 required two to four times the dosage of Eli Lilly’s comparator to achieve similar outcomes, prompting a 42 percent one-day stock drop.

Eli Lilly’s Orforglipron likewise fell short. On August 7, top-line data from the ATTAIN-1 Phase 3 trial revealed 11.5 percent weight loss in the 36 mg group over 72 weeks—barely above the 11.2 percent achieved in 36 weeks during Phase 2. By contrast, semaglutide’s 25 mg dose produced 13.9 percent weight loss over 64 weeks. In response, Eli Lilly’s share price plunged 14.14 percent—their largest single-day decline since 2000—and erased nearly USD 100 billion in market value.

Early-stage trials often benefit from high compliance and limited variability, creating an illusion of outsized efficacy. As trials scale up, real-world complexities bring efficacy and safety metrics back to earth. Pfizer’s Danuglipron underscores this reality: despite meeting key pharmacokinetic goals in Phase 1, a suspected case of drug-induced liver injury led to the program’s termination. Given the history of liver-toxicity concerns with small-molecule GLP-1 candidates, Pfizer’s caution was understandable in a cutthroat market where any safety signal can erode competitive advantage.

The halo effect around weight-loss drugs is dimming. On July 29, Novo Nordisk cut its 2025 guidance twice, lowering projected sales growth from 13–21 percent to 8–14 percent; its stock tumbled 21.8 percent in a single session. Even semaglutide’s blockbuster reputation has not shielded it from scrutiny. As clinical programs advance, more weight-loss therapies are confronting the market’s “unmasking” phase.

In contrast to the global market’s move from hype to reality, many domestic developers remain in the early “beauty filter” stage. More than ten homegrown GLP-1/GIP candidates are still in preclinical tests, buoyed by eye-catching early data and substantial financing. However, the path from animal studies and small cohorts to large-scale human trials is unforgiving, and derivative strategies—where companies tweak existing molecules to navigate around patents—face the same crucible of safety and efficacy. For example, Wentai’s VCT220 achieved patent clearance via a benzyl ether modification but retains the core framework of established drugs, raising concerns about repeating known toxicity pitfalls in later-stage trials.

The overseas experience confirms that short-term hype will not sustain long-term success; robust clinical evidence remains the ultimate arbiter. Next-generation weight-loss therapies must contend with high efficacy standards and the safety “black box” of novel small-molecule designs. Peptides, being endogenous derivatives, seldom fail in Phase 1 studies, whereas small molecules can trigger unforeseen adverse effects.

Yet the unmasking process marks maturation rather than demise. Companies continue to explore innovations in fat reduction, muscle augmentation, and extended-release formulations. In China’s burgeoning weight-loss market, success will hinge on closing the gap between promising early-stage data and large-scale clinical validation, and on establishing defensible advantages in safety, efficacy, and patient adherence. While the sector’s market potential remains vast, only those therapies that emerge unscathed from rigorous trials will justify their billion-dollar valuations.