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Biotechnology company Viking Remedies It has emerged as a potentially strong entrant – or takeover target – in the emerging weight-loss drug market.
Viking is just one of many companies racing 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 medications from Eli Lilly And Novo Nordisk. Their treatments sparked a gold rush in the weight-loss drug industry over the past year despite their sky-high prices and barriers to insurance coverage.
Some Wall Street analysts said Viking's experimental obesity treatment could be “best in class.” In a mid-stage trial, an injectable version of Viking appeared to promote greater weight loss than Eli Lilly's Zepbound.
Viking gave a first glimpse at that study's data on Tuesday, and its shares rose 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 predicts that between 10 million and 70 million Americans will be taking weight-loss drugs by 2028. Eli Lilly and Novo Nordisk have also struggled to provide adequate supplies of their treatments, giving other companies a chance to win market share.
The new data also makes Viking a more attractive deal target for larger companies trying to break into the space or expand their obesity treatment offerings.
It's too early to say whether Viking could have an advantage over existing weight loss treatments or in development. It is difficult to compare treatments without putting them head to head in the same clinical trial.
Viking also needs to do a late-stage study on its drug, and likely won't launch the shots until the latter part of the decade. The small company faces hurdles in 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 these problems.
The data suggests that Viking's drug may have an advantage
Viking's phase 2 trial followed more than 170 overweight or obese patients. They received different dose sizes of the injectable drug or placebo.
The trial did not directly compare Viking treatment with other medications. However, many analysts have compared Viking's shot with Eli Lilly's Zepbound shot, largely because they work the same way.
Zippound injection pen, Eli Lilly's weight-loss drug, is on display in New York City on December 11, 2023.
Brendan McDiarmid | Reuters
Both drugs mimic two naturally produced gut hormones called GLP-1 and GIP. GLP helps reduce food intake and appetite. GIP, which also suppresses appetite, may also improve how 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. Those who received a weekly 15-milligram dose of the treatment lost an average of 13.1% more body weight after 13 weeks than those who took a placebo.
It is worth noting that there was no evidence of a plateau in weight loss at week 13 for any dose of the drug. This suggests that “more weight loss may be achieved” by keeping patients on treatment longer, Brian Lien, Viking's CEO, said during a call with investors on Tuesday.
Viking Drugs' data shows a “best-in-class profile” among both approved and investigational weight-loss drugs in Phase 2 trials, William Blair analyst Andy Hsieh wrote in a note Tuesday. Eli Lilly's Zepbound drug achieved approximately 7% weight loss compared to placebo after 12 weeks in a phase 3 clinical trial, Hsieh noted.
Viking also appears to outperform Novo Nordisk's weight-loss drug Wegovy, according to a separate note issued Tuesday from BTIG analyst Justin Zelin.
Based on chart data from the phase 3 trial, analysts estimated that Wegovy caused approximately 5% weight loss over 13 weeks compared with placebo.
Meanwhile, several analysts estimated that some doses of Eli Lilly's experimental injection, retatrotide, caused 9% to 13% weight loss compared with placebo over 13 weeks, based on chart data from the mid-phase trial.
The majority of adverse side effects that patients experienced after starting Viking were mild or moderate. Many of these cases were gastrointestinal, which is common with all weight loss and diabetes treatments.
About 20% of patients taking the 15-milligram version of Viking stopped treatment early in the study. This compares to about 14% of those taking placebo who stopped early in the trial.
But Jefferies analyst Akash Tiwari wrote in a note on Tuesday that the Viking trial used faster “titration” in patients. This refers to increasing the patient's dose over time until they reach the target dose level.
He said Viking may be able to make its drug easier for patients to tolerate in a future trial with a slower titration, which could reduce the treatment's effectiveness.
The Vikings still have a long way to go
Despite the compelling data, Viking has a lot of 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 the clinical development plan for the treatment.
Viking CEO Brian Lien told investors on a call Tuesday that the company will likely conduct another Phase 2 trial that could last six to nine months.
Jefferies Tiwari estimates that Viking's treatment will not reach the market until 2029 or later. A late-stage trial on the drug can be long. Eli Lilly's phase 3 study of Zepbound lasted two and a half to three years.
Viking's late entry is one reason Tiwari doesn't think the company will effectively break into the Eli Lilly market.
The pharmaceutical giant could also launch a slate of other weight loss treatments over the next few years that may have advantages over Zepbound, whether they provide more weight loss or relief. They include Eli Lilly's experimental birth control pill, Orforglipron, and the widely watched drug retatrutide, which mimics three hormones in the gut instead of two.
An Eli Lilly and Company drug manufacturing plant in Branchburg, New Jersey, on March 5, 2021.
Mike Segar | Reuters
Analysts from Deutsche Bank added in a note on Tuesday that manufacturing treatments “at scale to meet huge demand has proven to be no easy feat.” That gives Eli Lilly and Novo Nordisk a “defensive moat” against competitors, they said.
The Vikings acknowledged that hurdle on the call Tuesday. Lian said that the company has sufficient supplies of the drug to support its clinical trials, but its manufacturing capacity is insufficient for commercial launch.
But Lien noted that the company “spends a lot of time” evaluating multiple manufacturing processes to understand “what's fastest, what's highest yield, what's cheapest, what's most 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. This could give Viking the commercial and manufacturing capabilities needed to compete in the weight-loss drug market.
Big Pharma can maximize the value of Viking Treatment because they can better navigate the discounting and reimbursement landscape for weight-loss drugs, William Blair's Hsieh added.
Some analysts expect other companies to have significant interest in Viking.
“This could be on the shopping list of any large-scale pharmaceutical or biotech company that wants to be in the obesity market but doesn't currently have a drug. There are a lot of them out there,” said Jay Olson, an analyst at Oppenheimer. CNBC.
He added that the company could “pay a very large premium for Viking and buy it…at a relatively low price compared to the potential that exists for a drug like this.” As of Friday, Viking's market cap was more than $8.5 billion.
Injection pens for the weight-loss drug Wegovy from Novo Nordisk are seen in this photo in Oslo, Norway, on November 21, 2023.
Victoria Kelsty | Reuters
Viking is an attractive target for a deal because of more than just the new data. Wall Street is looking forward to the company releasing initial 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, which “bodes well” for potential partnership discussions.
Viking also has other drugs in development, including a promising oral treatment for a specific 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 did not disclose any details about its discussions with potential partners. The company “has always been open to partner discussions since day one, so we always evaluate everything that is presented to us opportunistically,” Lien said during Viking's fourth-quarter earnings call last month.
Other drugmakers have pursued deals over the past year to carve out space in the weight-loss drug market.
Swiss company Roche said it will buy privately held US obesity drug company Carmot Therapeutics for $2.7 billion. AstraZeneca has signed a licensing agreement with Chinese biotechnology company Eccogene to develop a pill to treat obesity.
Novo Nordisk and Eli Lilly even acquired smaller obesity drug companies this year to maintain their market dominance.
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