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Biotech firm Viking Therapeutics has emerged as a strong potential entrant — or takeover goal — within the budding weight loss drug market.

Viking is only one of several companies racing to hitch the rising area. Some analysts say the market could possibly be value $100 billion by the top of the last decade. Viking goals to compete with injectable medication from Eli Lilly and Novo Nordisk, which sparked the burden loss drug business gold rush over the previous 12 months regardless of their hefty value tags and obstacles to insurance coverage protection.

Viking’s drug may grow to be a powerful rival. Some Wall Avenue analysts mentioned its experimental weight problems therapy could also be “best-in-class.” In a midstage trial, an injectable model of Viking’s drug appeared to advertise even higher weight reduction than Eli Lilly’s Zepbound.

Viking gave a primary glimpse at information from that research on Tuesday, and its shares soared 120%. The promising outcomes make the corporate a powerful potential participant in a market that can seemingly have room for extra entrants within the coming years.

Goldman Sachs projects that between 10 million and 70 million Individuals can be taking weight reduction medication by 2028. Eli Lilly and Novo Nordisk have additionally struggled to supply sufficient provide of their therapies, giving different firms an opportunity to win market share.

The brand new information additionally makes Viking a extra engaging deal goal for bigger firms making an attempt to interrupt into the area or broaden their weight problems therapy choices.

It is too early to say whether or not Viking’s drug may have an edge over current or growing weight reduction therapies. It is troublesome to check therapies with out pitting them face to face in the identical scientific trial.

Viking additionally must conduct a late-stage research on its drug, and sure will not launch the injection till the later a part of the last decade. The small firm faces hurdles to getting into the market, similar to manufacturing sufficient of the drug to satisfy booming demand. However an acquisition by a bigger firm may assist clear up a few of these points.

Information suggests Viking’s drug could have an edge

Viking’s part two trial adopted greater than 170 sufferers who’re obese or overweight. They acquired totally different dose sizes of the injectable drug or a placebo.

The trial didn’t immediately examine Viking’s therapy to different medication. Nonetheless, many analysts in contrast Viking’s injection to Eli Lilly’s Zepbound, largely as a result of they work the identical manner.

An injection pen of Zepbound, Eli Lilly’s weight reduction drug, is displayed in New York Metropolis on Dec. 11, 2023.

Brendan Mcdermid | Reuters

Each medication goal two naturally produced intestine hormones referred to as GLP-1 and GIP. The mixture is claimed to sluggish the emptying of the abdomen, make individuals really feel full for longer and suppress urge for food by slowing starvation indicators within the mind. In the meantime, Novo Nordisk’s weight reduction injection Wegovy solely targets GLP-1.

Analysts have been significantly impressed by the burden sufferers misplaced after they took the very best dose of Viking’s drug. Those that acquired a weekly 15 milligram dose of the therapy misplaced 13.1% of their physique weight on common after 13 weeks in comparison with those that took the placebo.

Viking’s drug information reveals a “best-in-class profile” amongst each accepted and experimental weight reduction medication with part two trials, William Blair analyst Andy Hsieh wrote in a observe Tuesday. Eli Lilly’s Zepbound generated roughly 7% weight reduction relative to a placebo after 12 weeks in a part three scientific trial, Hsieh famous.

Viking’s drug additionally seems to high Novo Nordisk’s weight reduction injection Wegovy, in keeping with a separate Tuesday observe from BTIG analysts.

Primarily based on chart information from a phase three trial, the analysts estimated that Wegovy brought on round 5% weight reduction at 13 weeks in comparison with a placebo.

In the meantime, a number of analysts estimated that some doses of Eli Lilly’s experimental injection, retatrutide, brought on between 9% and 13% weight reduction relative to a placebo at 13 weeks primarily based on chart information from a midstage trial.

The vast majority of opposed unwanted effects that sufferers skilled after beginning Viking’s drug have been gentle or average. A lot of these situations have been gastrointestinal, which is frequent throughout all weight reduction and diabetes therapies.

Round 20% of sufferers who took the 15 milligram model of Viking’s drug discontinued therapy early within the research. That compares with round 14% of these taking the placebo who stopped early within the trial.

However Jefferies analyst Akash Tewari wrote in a observe Tuesday that Viking’s trial used sooner “titration” in sufferers, which refers to growing the dose measurement a affected person takes over time till they attain a goal dosage stage.

He mentioned Viking could possibly make its drug simpler for sufferers to tolerate in a future trial with slower titration, which may probably decrease the therapy’s efficacy.

Viking nonetheless has an extended strategy to go

Regardless of the compelling information, Viking has way more work to do earlier than it might compete within the weight reduction drug market.

The corporate plans to satisfy with the U.S. Meals and Drug Administration later this 12 months to debate a scientific growth plan for the therapy.

Viking CEO Brian Lian informed buyers on a name Tuesday that the corporate will seemingly conduct one other part two trial that would final six to 9 months.

Jefferies’ Tewari estimates that Viking’s therapy will not attain the market till 2029 or later. A late-stage trial on the drug could possibly be prolonged. Eli Lilly’s part three research on Zepbound lasted two and a half to a few years.

The late entrance of Viking’s drug is one purpose why Tewari would not imagine the corporate will meaningfully reduce into Eli Lilly’s market.

The pharmaceutical big may additionally launch a slate of different weight reduction therapies over the subsequent few years which will have benefits over Zepbound, whether or not they supply extra weight reduction or comfort. They embody Eli Lilly’s experimental capsule orforglipron and the broadly watched retatrutide, which mimics three intestine hormones as an alternative of two.

An Eli Lilly and Firm pharmaceutical manufacturing plant is pictured in Branchburg, New Jersey, on March 5, 2021.

Mike Segar | Reuters

Analysts from Deutsche Financial institution added in a observe Tuesday that manufacturing the therapies “at scale to meet outsized demand has proven to be no easy feat,” which supplies Eli Lilly and Novo Nordisk a “defensive moat” in opposition to rivals.

Viking acknowledged this hurdle on the decision Tuesday. Lian mentioned the corporate has sufficient provide of the drug to assist its scientific trials, however its manufacturing capability is inadequate for a business rollout.

However Lian famous that the corporate is “spending a lot of time” evaluating a number of manufacturing processes to know “what’s fastest, what’s highest yielding, what’s cheapest and what’s most scalable.”

Partnerships, buyouts are on the desk

Viking’s spectacular information may make it a pretty goal for a takeover or partnership with a big pharmaceutical firm. That might give Viking the business and manufacturing capabilities wanted to compete within the weight reduction drug market.

William Blair’s Hsieh added that enormous pharmaceutical firms may maximize the worth of Viking’s therapy as a result of they may higher navigate the rebate and reimbursement panorama for weight reduction medication.

Some analysts count on different firms to have excessive curiosity in Viking.

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

He added that an organization may “pay a pretty significant premium for Viking and pick this up … for a relatively low price compared to the potential that exists for a drug like this.” As of Friday, Viking had a market cap of greater than $8.5 billion.

Injection pens of Novo Nordisk’s weight reduction drug Wegovy are proven on this picture in Oslo, Norway, on Nov. 21, 2023.

Victoria Klesty | Reuters

Viking is an interesting deal goal due to extra than simply the brand new information. Wall Avenue is raring for the corporate to launch early-stage trial outcomes on an oral model of its weight reduction therapy this quarter.

The BTIG analysts famous that the mental property protection for each variations of the drug extends past 2040, “boding well” for potential partnership discussions.

Viking additionally has different medication in growth, together with an oral therapy for a sure type of liver illness. Eli Lilly, Novo Nordisk and different drugmakers are additionally racing to see whether or not their medication can deal with that very same situation.

Viking hasn’t disclosed any particulars about its discussions with potential companions. However the firm has “always been open to partner discussions since day one, so we’re always opportunistically evaluating whatever is presented to us,” Lian mentioned throughout Viking’s fourth-quarter earnings name final month.

Different drugmakers have pursued offers over the previous 12 months to carve out an area within the weight reduction drug market.

Swiss firm Roche mentioned it will buy the privately held U.S. weight problems drugmaker Carmot Therapeutics for $2.7 billion. AstraZeneca signed a licensing agreement with Chinese language biotech firm Eccogene to develop an weight problems capsule.

Even Novo Nordisk and Eli Lilly have snapped up smaller weight problems drug firms this 12 months to take care of their dominance available in the market.