Contract manufacturer CordenPharma and Viking Therapeutics have entered into a significant manufacturing agreement, with Viking committing $150 million to secure production capacity for its experimental weight loss treatment. The deal, announced Tuesday, will enable the production of up to 200 million injectable doses and 1 billion oral doses annually of Viking’s obesity drug candidate.
The manufacturing agreement comes as Viking prepares to advance its drug candidate VK2735 into Phase 3 clinical trials, scheduled to begin before the end of June. The company has confirmed it currently possesses adequate supply to complete its late-stage testing program.
The arrangement positions Viking to potentially meet future market demand for its weight loss medication, should it receive regulatory approval. This proactive step addresses supply chain challenges that initially plagued industry leaders Novo Nordisk and Eli Lilly with their obesity treatments.
VK2735, which targets both GLP-1 and GIP hormones similar to Eli Lilly’s Zepbound, has shown promising results in Phase 2 trials. Study participants experienced approximately 15% weight reduction over a three-month period, suggesting competitive potential against existing treatments. Early data from an oral version of the drug has also yielded encouraging results.
Despite the strategic importance of securing manufacturing capacity, Viking’s stock declined following the announcement. William Blair analyst Andy Hsieh noted that some investors might interpret the deal as diminishing the likelihood of Viking being acquired by a larger pharmaceutical company.
The agreement involves Viking making prepayments over a four-year period, which will be credited against future production orders. The manufacturing capacity includes 100 million autotinjector pens and an additional 100 million vial and syringe combinations for the injectable formulation. Importantly, Viking maintains full rights to its drug candidate under the agreement.
Brian Lian, Viking’s CEO, expressed confidence in the partnership, citing CordenPharma’s established expertise in commercial peptide manufacturing as crucial for meeting anticipated market demand. The company’s financial position remains strong, with $2.5 billion in cash and cash equivalents reported at the end of 2024.
While some investors may view the deal as a signal that Viking intends to remain independent, analysts have offered positive perspectives. Stifel analyst Annabel Samimy suggested the agreement provides Viking with strategic flexibility to develop VK2735 independently while ensuring sufficient supply for the high-demand obesity market.
The manufacturing deal represents a significant milestone in Viking’s development trajectory, though it has contributed to recent stock volatility. The company’s shares have experienced a nearly 40% decline this year, partly due to shifting investor sentiment regarding potential acquisition scenarios.
The obesity drug market has become increasingly competitive, with major pharmaceutical companies vying for position in this rapidly growing sector. Viking’s manufacturing agreement with CordenPharma demonstrates its commitment to establishing itself as a serious contender in this space, regardless of whether it remains independent or becomes an acquisition target.
The deal’s structure allows Viking to maintain control over its drug development while securing crucial manufacturing capabilities, addressing one of the primary challenges facing companies in the obesity drug market. This strategic move could prove vital as Viking advances toward potential commercialization of VK2735, assuming successful completion of clinical trials and regulatory approval.