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biotechnology company Viking therapeutics has become a strong potential entrant (or acquisition target) in the nascent weight loss drug market.
Viking is just one of several companies vying to join this growing space. Some analysts say the market could be worth $100 billion by the end of the decade. Viking aims to compete with injectable drugs Eli Lilly and Nordiskwhich sparked a gold rush in the weight loss drug industry over the past year despite its high prices and barriers to insurance coverage.
Viking's drug could become a strong rival. Some Wall Street analysts said his experimental obesity treatment may be “best in class.” In a mid-stage trial, an injectable version of Viking's drug appeared to promote even greater weight loss than Eli Lilly's Zepbound.
Viking gave its first look at data from that study on Tuesday and its shares soared 120%. The promising results make the company an impressive potential player in a market that will likely have room for more entrants in the coming years.
Goldman Sachs projects that between 10 million and 70 million Americans will take weight-loss drugs by 2028. Eli Lilly and Novo Nordisk have also struggled to offer a sufficient supply of their treatments, giving other companies a chance to gain market share.
The new data also makes Viking a more attractive deal target for larger companies trying to enter the space or expand their obesity treatment offerings.
It's too early to say whether Viking's drug might have an advantage over existing or developing weight-loss treatments. It is difficult to compare therapies without pitting them against each other in the same clinical trial.
Viking also needs to conduct a late-stage study on its drug and likely won't release the shot until the latter part of the decade. The small business faces obstacles to entering the market, such as manufacturing enough of the drug to meet growing demand. But an acquisition by a larger company could help solve some of those problems.
Data Suggests Viking Drug May Have an Advantage
Viking's phase two trial followed more than 170 overweight or obese patients. They received different dose sizes of the injectable drug or a placebo.
The trial did not directly compare Viking treatment with other drugs. Still, many analysts compared Viking's shot to Eli Lilly's Zepbound, largely because they work the same way.
An injectable pen of Zepbound, Eli Lilly's weight loss drug, is on display in New York City on December 11, 2023.
Brendan Mcdermid | Reuters
Both drugs target two naturally produced gut hormones called GLP-1 and GIP. The combination is said to slow stomach emptying, make people feel full longer, and suppress appetite by decreasing hunger signals in the brain. Meanwhile, Novo Nordisk's Wegovy weight loss shot only targets GLP-1.
Analysts were particularly impressed by the weight patients lost after taking the highest dose of the Viking drug. Those who received a weekly dose of 15 milligrams of the treatment lost 13.1% of their body weight on average after 13 weeks compared to those who took the placebo.
Data on Viking's drugs show a “best-in-class profile” among approved and experimental weight-loss drugs with phase two trials, William Blair analyst Andy Hsieh wrote in a note Tuesday. Eli Lilly's Zepbound generated approximately 7% weight loss compared to a placebo after 12 weeks in a phase three clinical trial, Hsieh noted.
Viking's drug also appears to outperform Novo Nordisk's Wegovy weight-loss injection, according to a separate Tuesday note from BTIG analysts.
Based on graphical data from a phase three trial, analysts estimated that Wegovy caused about 5% weight loss at 13 weeks compared to a placebo.
Meanwhile, several analysts estimated that some doses of Eli Lilly's experimental injection, retatrutide, caused between 9% and 13% weight loss relative to a placebo at 13 weeks, according to graphical data from a trial of half stage.
Most of the adverse side effects patients experienced after starting Viking's medication were mild or moderate. Many of those cases were gastrointestinal, which is common in all diabetes and weight loss treatments.
About 20% of patients taking the 15-milligram version of Viking's drug stopped treatment early in the study. That compares with about 14% of those taking the placebo who stopped at the beginning of the trial.
But Jefferies analyst Akash Tewari wrote in a note Tuesday that the Viking trial used more rapid “titration” in patients, which refers to increasing the size of the dose a patient takes over time to achieve a target dose level.
He said Viking could make its drug easier for patients to tolerate in a future trial with slower titration, which could potentially reduce the treatment's effectiveness.
Viking still has a long way to go
Despite the compelling data, Viking has much more work to do before it can compete in the weight loss drug market.
The company plans to meet with the U.S. Food and Drug Administration later this year to discuss a clinical development plan for the treatment.
Viking CEO Brian Lian told investors in a phone call Tuesday that the company will likely conduct another phase two trial that could last six to nine months.
Jefferies' Tewari estimates Viking's treatment won't hit the market until 2029 or later. A late-stage trial of the drug could be lengthy. Eli Lilly's phase three study of Zepbound lasted between two and a half to three years.
The late entry of Viking's drug is one reason Tewari doesn't think the company will make a significant inroads into Eli Lilly's market.
The pharmaceutical giant could also launch a number of other weight-loss treatments in the coming years that may have advantages over Zepbound, whether they offer more weight loss or are more convenient. These include Eli Lilly's experimental pill orforglipron and the widely watched retatrutide, which mimics three gut hormones instead of two.
An Eli Lilly and Company pharmaceutical manufacturing plant is shown in Branchburg, New Jersey, on March 5, 2021.
Mike Segar | Reuters
Analysts at Deutsche Bank added in a note on Tuesday that manufacturing the treatments “at scale to meet enormous demand has not proven to be an easy task,” giving Eli Lilly and Novo Nordisk a “defensive moat” against their rivals.
Viking acknowledged this hurdle on Tuesday's call. Lian said the company has enough supply of the drug to support its clinical trials, but its manufacturing capacity is insufficient for a commercial launch.
But Lian noted that the company is “spending a lot of time” evaluating multiple manufacturing processes to understand “what's faster, what's higher throughput, what's cheaper and what's more scalable.”
Partnerships and acquisitions are on the table
Viking's impressive data could make it an attractive target for an acquisition or partnership with a large pharmaceutical company. That could give Viking the business and manufacturing capabilities needed to compete in the weight-loss drug market.
William Blair's Hsieh added that big pharmaceutical companies could maximize the value of Viking's treatment because they could better navigate the discount and rebate landscape for weight-loss drugs.
Some analysts expect other companies to have strong interest in Viking.
“This could very well be on the shopping list of any large-cap pharmaceutical or biotech company that wants to be in the obesity market but doesn't currently have a drug. There are plenty of them out there,” the Oppenheimer analyst said. , Jay Olson. CNBC.
He added that a company could “pay a fairly significant premium for Viking and acquire it…for a relatively low price compared to the potential that exists for a drug like this.” As of Friday, Viking had a market capitalization of more than $8.5 billion.
This photo shows injectable pens of the weight-loss drug Wegovy from Novo Nordisk in Oslo, Norway, on Nov. 21, 2023.
Victoria Klesty | Reuters
Viking is an attractive deal target because of more than just the new data. Wall Street is eager for the company to release results from early-stage trials of an oral version of its weight-loss treatment this quarter.
BTIG analysts noted that intellectual property coverage for both versions of the drug extends beyond 2040, which “bodes well” for potential partnership discussions.
Viking also has other drugs in development, including an oral treatment for a certain form of liver disease. Eli Lilly, Novo Nordisk and other drugmakers are also competing to see if their drugs can treat the same condition.
Viking has not revealed any details about its conversations with potential partners. But the company “has always been open to conversations with partners from day one, so we're always opportunistically evaluating everything that comes our way,” Lian said during Viking's fourth-quarter earnings conference call last month. past.
Other drugmakers have sought deals over the past year to carve out a space in the weight-loss drug market.
Swiss company Roche said it would buy privately held US obesity drugmaker Carmot Therapeutics for $2.7 billion. AstraZeneca signed a licensing agreement with Chinese biotech company Eccogene to develop an anti-obesity pill.
Even Novo Nordisk and Eli Lilly have acquired smaller obesity pharmaceutical companies this year to maintain their dominance in the market.
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