Viking Therapeutics Faces New Competition in the Weight-Loss Market
The biotech company Viking Therapeutics (NASDAQ: VKTX) experienced a significant decline in its share price in December, dropping by 24%. This downward trend was largely attributed to a major move by pharmaceutical giant Merck (NYSE: MRK) into the lucrative weight-loss market.
A New Player Enters the Scene
Merck recently announced a licensing deal with China-based biotech Hansoh Pharma for its investigational weight-loss drug, HS-10535. If successfully developed, this drug could pose a substantial threat to Viking’s lead pipeline program, VK2735, which is also an obesity treatment. VK2735 has shown promising results in clinical trials and is relatively advanced in its development process.
The Advantages of VK2735
One key advantage of VK2735 is that it is an orally administered treatment, setting it apart from existing FDA-approved products like Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound, which are delivered via injection. This oral administration could make VK2735 a more appealing option for patients.
The Stakes are High in the Weight-Loss Game
The market for weight-loss treatments is still largely untapped, with only two GLP-1 drugs approved specifically for weight loss in the U.S. The demand for these drugs is high, driven by the country’s high rates of obesity and the desire for a convenient solution to weight loss.
Merck’s Commitment to HS-10535
Merck has demonstrated its commitment to HS-10535 by agreeing to a $112 million up-front payment and up to $1.9 billion in milestone payments and royalties, assuming the drug is successfully brought to market.
Don’t Count Viking Out Just Yet
While Merck’s move is certainly a concern for Viking investors, it’s too early to write off VK2735. HS-10535 still has a ways to go in its development cycle, and its efficacy remains to be seen. VK2735, on the other hand, appears to be a more promising bet for commercialization.
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