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Biotech companies Viking Therapeutics has emerged as a strong potential entrant – or acquisition target – in the emerging weight-loss drug market.
Viking is just one of several companies racing to join the growing market. Some analysts believe the market could be worth $100 billion by the end of the decade.
Viking wants to compete with injectable drugs Eli Lilly And Novo Nordisk. Their treatments sparked the pharmaceutical industry’s weight-loss 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-term study, 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 the data from that study on Tuesday, and its shares rose 120%. The promising results make the company a formidable potential player in a market that will likely have room for additional entrants in the coming years.
Goldman Sachs predicts that between 10 and 70 million Americans will be taking weight loss medications by 2028. Eli Lilly and Novo Nordisk also struggled to provide a sufficient supply of treatments, giving other companies a chance to gain market share.
The new data also makes Viking a more attractive contract target for larger companies looking to enter the field or expand their obesity treatment offerings.
It’s too early to tell 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 of its drug and probably won’t bring the shot to market until the end of the decade. The small company faces hurdles in entering the market, such as producing sufficient quantities of the drug to meet booming demand. However, an acquisition by a larger company could help resolve some of these issues.
Data suggests Viking’s drug may have an advantage
Viking’s Phase 2 trial followed more than 170 overweight or obese patients. They received different doses of the injectable drug or a placebo.
The study did not directly compare Viking’s treatment with other medications. Still, many analysts compared Viking’s injection to Eli Lilly’s Zepbound, primarily because they work in the same way.
An injection 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 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 the way the body breaks down sugar and fat.
Meanwhile, Novo Nordisk’s weight loss shot Wegovy only targets GLP-1.
Analysts were particularly impressed by patients’ weight loss after taking the highest dose of Viking’s drug. Those who received a weekly 15-milligram dose of the treatment lost an average of 13.1% of their body weight after 13 weeks compared to those who took the placebo.
Notably, there was no evidence of a plateau in weight loss at any dose of the drug at week 13. This suggests that “further weight loss could be achieved” if patients continued 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 2 trials, William Blair analyst Andy Hsieh wrote in a note on Tuesday. Eli Lilly’s Zepbound resulted in about 7% weight loss after 12 weeks compared to a placebo in a Phase III clinical trial, Hsieh noted.
Viking’s drug also appears to be outperforming Novo Nordisk’s weight-loss shot Wegovy, according to a separate note from BTIG analysts on Tuesday.
Based on chart data from a Phase III trial, analysts estimated that Wegovy resulted in about 5% weight loss compared to a placebo after 13 weeks.
Meanwhile, several analysts estimated that some doses of Eli Lilly’s experimental shot, retatrutide, caused weight loss of between 9% and 13% compared to a placebo after 13 weeks, based on chart data from a mid-stage trial.
Most adverse side effects experienced by patients after starting to take Viking’s medication were mild or moderate. Many of these cases were gastrointestinal in nature, which is the case with all weight loss treatments and diabetes.
About 20% of patients taking the 15-milligram version of Viking’s drug stopped treatment at the start of the study. In comparison, about 14% of those taking the placebo dropped out at the start of the study.
But Jefferies analyst Akash Tewari wrote in a note Tuesday that Viking’s study used a faster “titration” in patients. This refers to increasing the dose a patient takes over time until they reach a target dose.
He said that in a future study, Viking may be able to make its drug easier for patients to tolerate through slower titration, which could potentially reduce the treatment’s effectiveness.
Viking still has a long way to go
Despite the compelling data, Viking still has a long way to go 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 call Tuesday that the company will likely conduct another Phase 2 trial, which could last six to nine months.
Jefferies’ Tewari estimates Viking’s treatment won’t come to market until 2029 or later. A late-stage study of the drug could be lengthy. Eli Lilly’s Phase 3 study of Zepbound lasted two and a half to three years.
The Viking drug’s late entry into the market is one reason Tewari doesn’t believe the company will intervene in Eli Lilly’s market.
The pharmaceutical giant could also launch a number of other weight loss treatments in the next few years that may have advantages over Zepbound, whether they provide more weight loss or comfort. These include Eli Lilly’s experimental pill orforglipron and the widely touted retatrutide, which mimics three gut hormones instead of two.
An Eli Lilly and Company pharmaceutical manufacturing facility is pictured March 5, 2021 in Branchburg, New Jersey.
Fresh Mike | Reuters
Analysts at Deutsche Bank added in a note on Tuesday that producing the treatments “at scale to meet outsized demand” has proven to be no easy task. They said this gave Eli Lilly and Novo Nordisk a “defense moat” against their rivals.
Viking acknowledged that hurdle on Tuesday’s call. Lian said the company has enough supplies of the drug to support its clinical trials, but its production capacity is insufficient for commercial launch.
But Lian noted that the company “spends a lot of time” evaluating multiple manufacturing processes to understand “what is fastest, what has the highest yield, what is cheapest and what is 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 major pharmaceutical company. This would give Viking the commercial and manufacturing capabilities it needs to compete in the weight loss drug market.
William Blair’s Hsieh added that big pharmaceutical companies can maximize the value of the Viking treatment because they can better navigate the discount and reimbursement landscape for weight-loss drugs.
Some analysts believe that other companies are very interested in Viking.
“This could well be on the shopping list of any major pharma or biotech company that wants to enter the obesity market but does not currently have a drug. There are a lot of them,” Oppenheimer analyst Jay Olson told CNBC.
He added that a company “could pay a pretty significant 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 had a market cap of more than 8 .5 billion US dollars.
In this photo, injection pens of Novo Nordisk’s weight loss drug Wegovy are seen on November 21, 2023 in Oslo, Norway.
Victoria Klesty | Reuters
Viking is an attractive contract target not only because of the new data. Wall Street expects the company to release initial trial results on an oral version of its weight-loss treatment this quarter.
The BTIG analysts noted that intellectual property protection for both versions of the drug extends beyond 2040, which is “a good sign” for potential partnership discussions.
Viking is also developing other drugs, including a promising oral treatment for a specific form of liver disease. Eli Lilly, Novo Nordisk and other drugmakers are also fighting over whether 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 from day one, so we’re always opportunistically evaluating everything that’s presented to us,” Lian said last month during Viking’s fourth-quarter earnings call.
Other drugmakers have struck deals in the past year to carve out a place in the weight-loss drug market.
Swiss company Roche announced it would buy private US obesity drug maker Carmot Therapeutics for $2.7 billion. AstraZeneca has signed a licensing agreement with Chinese biotech company Eccogene to develop an obesity pill.
Even Novo Nordisk and Eli Lilly have snapped up smaller obesity drug companies this year to assert their dominance in the market.
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2024-03-03 14:04:46
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