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Viking Therapeutics emerges as a big player in weight loss drugs – or a takeover target

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Biotechnology company Viking Therapeutics appeared as a entrant with high potential — or takeover target — in the making weight loss drugs market.

Viking is just one of several companies race to join the growing space. Some analysts believe the market could be worth 100 billion dollars by the end of the decade.

Viking wants to compete with injectable drugs Elie Lilly And Novo Nordisk. Their treatments have sparked the weight-loss drug industry’s gold rush over the past year, despite their high prices and obstacles 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’s drug appeared to promote even greater weight loss than Eli Lilly’s. Related to Zep.

Viking gave a first look at the data from this study on Tuesday, and its stocks soared 120%. These promising results make the company an impressive potential player in a market that will likely have room for more players in the years to come.

Goldman Sachs projects that between 10 and 70 million Americans will be taking weight-loss drugs by 2028. Eli Lilly and Novo Nordisk have also struggled to offer sufficient supplies of their treatments, giving other companies a chance to gain market shares.

The new data also makes Viking a more attractive target for larger companies trying to break into the industry or expand their obesity treatment offerings.

It’s too early to say whether Viking’s drug might have an advantage over existing weight loss treatments or those in development. 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 likely won’t launch the shot until the end of the decade. The small company faces obstacles to entering the market, such as making enough of the drug to meet booming demand. But an acquisition by a larger company could help solve some of these problems.

Data suggests Viking’s drug may have benefit

Viking’s phase two trial followed more than 170 overweight or obese patients. They received different doses of the injectable drug or a placebo.

The trial did not directly compare Viking’s treatment to other medications. Still, many analysts have compared Viking Injection to Eli Lilly’s Zepbound, largely because they work similarly.

An injector pen for Zepbound, Eli Lilly’s weight loss drug, is on display in New York on December 11, 2023.

Brendan McDermid | Reuters

Both drugs mimic two naturally produced gut hormones called GLP-1 and GIP. GLP helps reduce food consumption and appetite. GIP, which also suppresses appetite, may also improve how the body breaks down sugar and fat.

Meanwhile, Wegovy, Novo Nordisk’s weight loss injection, only targets 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 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.

Notably, there was no evidence of a plateau in weight loss at week 13, regardless of drug dose. This suggests that “additional weight loss could be achieved” by keeping patients on treatment longer, Viking CEO Brian Lian said Tuesday on a call with investors.

Viking’s drug data shows a “top-notch profile” among approved and investigational weight-loss drugs with phase two trials, William Blair analyst Andy Hsieh wrote in a note Tuesday. Eli Lilly’s Zepbound generated about 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 map data from a phase three trialanalysts estimated that Wegovy led to about 5% weight loss at 13 weeks compared to a placebo.

At the same time, several analysts estimated that certain doses of Eli Lilly’s investigational injection, retatrutide, caused weight loss between 9% and 13% compared to a placebo at 13 weeks, based on the data graphics of a intermediate test.

The majority of adverse side effects experienced by patients after starting treatment with Viking 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 took the 15-milligram version of Viking’s drug stopped treatment early in the study. That compares to about 14% of those taking the placebo who stopped their treatment early in the trial.

But Jefferies analyst Akash Tewari wrote in a note Tuesday that Viking’s trial used more rapid “titration” in patients. This refers to increasing the dose a patient takes over time until they reach a target dose level.

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 compelling data, Viking still has a lot of 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 Tuesday that the company will likely conduct another phase two trial that could last six to nine months.

Jefferies’ Tewari estimates that Viking’s treatment won’t hit the market until 2029 or later. An advanced trial of this drug could be lengthy. Eli Lilly’s phase three study of Zepbound lasted two to three and a half years.

The late arrival of Viking’s drug is one reason Tewari doesn’t believe the company can meaningfully penetrate Eli Lilly’s market.

The pharmaceutical giant could also launch a range of other weight loss treatments in the coming years that could 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 facility is pictured in Branchburg, New Jersey on March 5, 2021.

Mike Segar | Reuters

Deutsche Bank analysts added in a note Tuesday that manufacturing the treatments “at scale to meet outsized demand has not proven to be an easy task.” They said this gave Eli Lilly and Novo Nordisk a “defensive moat” against their rivals.

Viking acknowledged this obstacle during the call Tuesday. Lian said the company has sufficient supply of the drug to support its clinical trials, but its manufacturing capacity is insufficient for commercial deployment.

But Lian noted that the company “spends a lot of time” evaluating multiple manufacturing processes to understand “what is the fastest, what has the highest yield, what is the cheapest and what is the most “evolutionary”.

Partnerships, buyouts are on the table

Viking’s impressive data could make it an attractive target for a buyout or a partnership with a major pharmaceutical company. This could give Viking the sales 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 rebate and reimbursement landscape for weight-loss drugs.

Some analysts expect other companies to be very interested in Viking.

“This could very well be on the shopping list of any large-cap pharmaceutical or biotech company that wants to enter the obesity market but doesn’t currently have a drug. There are plenty of them,” Jay Olson said. , analyst at Oppenheimer. CNBC.

He added that a company could “pay a fairly large 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.

Injector pens of Novo Nordisk’s weight loss drug Wegovy are shown in this photo in Oslo, Norway, November 21, 2023.

Victoria Klesty | Reuters

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