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Dive Brief:
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Viking Therapeutics is secure production capacity for its experimental obesity drug, announcing Tuesday it will prepay contract manufacturer CordenPharma $150 million to produce up to 200 million injectable and 1 billion oral doses of the treatment annually.
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The deal comes as Viking prepares to start late-stage testing of an injectable form of the therapy, VK2735, by the end of June. The company said in February it has enough drug supply to complete its Phase 3 program.
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The agreement could help Viking meet eventual demand for its weight loss drug, if approved, something even market leaders Novo Nordisk and Eli Lilly struggled with initially. Still, company shares fell in Tuesday morning trading, as “investors could view the deal as a negative development with respect to Viking’s takeout prospects,” wrote William Blair analyst Andy Hsieh.
Dive Insight:
Like Eli Lilly’s fast-selling obesity drug Zepbound, VK2735 stimulates two gut hormones called GLP-1 and GIP. Phase 2 testing has shown the therapy could be competitive with Lilly’s offering, with the drug spurring 15% weight loss study participants over about three months. An oral version of the treatment showed early promise, too.
With late-stage testing and, potentially, a drug launch ahead, Viking needs to ensure it can produce enough of its drug to compete with larger, established rivals. The deal announced Tuesday is meant to solve that problem.
“CordenPharma's established presence in commercial peptide manufacturing gives us confidence in their ability to deliver supply commensurate with what we anticipate will be significant commercial demand,” said Viking CEO Brian Lian, in a statement.
Viking shares soared to record highs last year in part because it’s seen as a potential acquisition target. Indications that it might remain independent instead have eroded its stock price, which has fallen nearly 40% this year. Hsieh noted that, while some investors may be disappointed, he’s “bullish on the deal and believe it removes one of the major uncertainties” facing the company.
Stifel analyst Annabel Samimy agreed, writing in a separate note the deal gives Viking “the flexibility to develop VK2735 independently indefinitely and supply the high-demand obesity market.”
Viking’s prepayments will be made over the next four years and be credited against future orders. The deal enables the company to produce 100 million autotinjector pens and an additional 100 million vial and syringe products for the injectable formulation of VK2735. Viking won’t relinquish any drug rights.
At the end of 2024, Viking had $2.5 billion in cash and cash equivalents on its balance sheet.