Cr| Istock | Getty Images
Biotechnology company Viking Therapeutics has emerged as a strong potential entrant — or takeover target — in the nascent weight-loss drug market.
Viking is just one of many companies vying to join the growing space. Some analysts say the purchase may be worth it 100 billion dollars until the end of the decade.
Viking aims to compete with injectable drugs from Eli Lilly and Novo Nordisk. Their treatments sparked the weight-loss drug industry’s gold rush last year despite their high prices and barriers to insurance coverage.
Some Wall Street analysts said Viking’s experimental obesity treatment may be “best in class.” In a mid-stage trial, an injectable version of Viking’s drug appeared to promote even more weight loss than Eli Lilly’s Zepbound.
Viking gave a first look at the 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 and 70 million Americans will take weight loss drugs by 2028. Eli Lilly and Novo Nordisk have also struggled to provide sufficient supply of their treatments, giving other companies a chance to gain market share.
The new data also makes Viking a more attractive target for larger companies looking to enter the space or expand their obesity treatment offerings.
It’s too early to tell whether Viking’s drug could have an advantage over existing or developing weight loss treatments. It’s hard to compare treatments without putting them head-to-head in the same clinical trial.
Viking also has to conduct a late-stage study of its drug and likely won’t start injecting it until the end of the decade. The small company faces hurdles to market entry, such as producing enough of the drug to meet growing demand. But an acquisition by a larger company could help solve some of these issues.
The data suggest that Viking’s drug may have an advantage
The second phase of Viking’s trial followed more than 170 patients who are overweight or obese. They received different dose sizes of the injected drug or a placebo.
The trial did not directly compare Viking’s treatment with other drugs. However, many analysts have compared Viking’s injection to Eli Lilly’s Zepbound, mainly because they work the same way.
A Zepbound injection pen, Eli Lilly’s weight loss drug, is shown in New York on Dec. 11, 2023.
Brendan McDermid | Reuters
Both drugs mimic two naturally occurring gut hormones called GLP-1 and GIP. GLP helps reduce food intake and appetite. GIP, which also suppresses appetite, can also improve the way the body breaks down sugar and fat.
Meanwhile, Novo Nordisk’s Wegovy weight loss injection targets only GLP-1.
Analysts were particularly impressed by the weight patients lost after taking the highest dose of Viking’s drug. Those who received a weekly 15-milligram dose of the treatment lost 13.1% of their body weight on average after 13 weeks compared to those who received a placebo.
Notably, there was no evidence of weight loss at week 13 for any drug dose. That suggests “further weight loss can be achieved” by keeping patients on the treatment longer, Viking CEO Brian Lian said during a call with investors on Tuesday.
Viking’s drug data shows a “best-in-class profile” among both approved and experimental weight-loss drugs with phase-two trials, William Blair analyst Andy Hsieh wrote in a note on Tuesday. Eli Lilly’s Zepbound caused about 7 percent weight loss over a placebo after 12 weeks in a phase three clinical trial, Hsieh noted.
Viking’s drug also appears to be on top of Novo Nordisk’s Wegovy weight-loss injection, according to a separate note on Tuesday from analysts at BTIG.
Based on graph data from a trial phase threethe 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 over a placebo at 13 weeks based on chart data from trial in the middle.
The majority of side effects that patients experienced after starting Viking’s medicine were mild or moderate. Many of these cases were gastrointestinal, which is common in all weight loss and diabetes treatments.
About 20% of patients who received the 15-millimeter version of Viking’s drug discontinued treatment early in the study. This compares with about 14% of those taking placebo who stopped early in the trial.
But Jefferies analyst Akash Tewari wrote in a note Tuesday that Viking’s trial used faster “titration” in patients. This refers to increasing the size of the patient’s dose over time until a target dose level is reached.
He said Viking may be able to 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 a lot more work to do before it can compete in the weight loss drug market.
The company plans to meet with the US Food and Drug Administration later this year to discuss a clinical development plan for the treatment.
Viking CEO Brian Lian told investors in a 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 for the drug can be lengthy. Eli Lilly’s third phase study of Zepbound lasted two and a half to three years.
The delayed entry of Viking’s drug is one reason why Tewari doesn’t think the company will make much 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 convenience. They 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 pictured in Branchburg, New Jersey, on March 5, 2021.
Mike Segar | Reuters
Analysts at Deutsche Bank added in a note on Tuesday that producing the treatments “at scale to meet excess demand has proven no easy feat.” They said this gives Eli Lilly and Novo Nordisk a “defensive moat” against rivals.
Viking acknowledged that hurdle on Tuesday’s call. Lian said the company has enough stock of the drug to support its clinical trials, but its production capacity is insufficient for commercialization.
However, Lian noted that the company “spends a lot of time” evaluating multiple production processes to understand “what is faster, what is higher yield, what is cheaper and what is more scalable.”
Partnerships, acquisitions are on the table
Viking’s impressive data could make it an attractive target for acquisition or a partnership with a big pharmaceutical company. This could give Viking the commercial and manufacturing capabilities needed to compete in the weight loss drug market.
William Blair’s Hsieh added that big drug companies could maximize the value of Viking’s treatment because they could better navigate the discount and reimbursement landscape for weight-loss drugs.
Some analysts expect other companies to have high interest in Viking.
“This could very well be on the shopping list for any large-cap pharmaceutical or biotech company that wants to be in the obesity market but currently doesn’t have a drug. There are a lot of them out there,” said Oppenheimer analyst Jay Olson . CNBC.
He added that a company could “pay a pretty significant premium for Viking and get it … at 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.
Injection pens of Novo Nordisk’s weight loss drug Wegovy are seen in this photo in Oslo, Norway, on November 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 early-stage trial results on an oral version of the weight-loss treatment this quarter.
BTIG analysts noted that intellectual property coverage for both versions of the drug extends beyond 2040, “may well” for potential partnership discussions.
Viking also has other drugs in development, including a promising oral treatment for a certain form of liver disease. Eli Lilly, Novo Nordisk and other drugmakers are also racing to see if their drugs can treat the same condition.
Viking has not disclosed details of its discussions with potential partners. But the company has “always been open to discussions with partners since day one, so we’re always opportunistically evaluating whatever comes our way,” Lian said during Viking’s fourth-quarter earnings call last month.
Other drugmakers have pursued deals over the past year to carve out a niche in the weight-loss drug market.
Swiss company Roche said it would Buy privately held US obesity drug company Carmot Therapeutics for $2.7 billion. AstraZeneca signed a licensing with Chinese biotech company Eccogene to develop an obesity pill.
Even Novo Nordisk and Eli Lilly have bought smaller obesity drug companies this year to maintain their dominance of the market.
Don’t miss these stories from CNBC PRO: