Contract manufacturer CordenPharma and biotech firm Viking
Therapeutics have entered into a significant manufacturing agreement, with Viking committing to a $150 million prepayment to secure substantial production capacity for their experimental weight loss treatment. The arrangement will enable the manufacture of up to 200 million injectable doses and 1 billion oral doses annually of Viking’s obesity drug candidate.
The timing of this agreement coincides with Viking’s preparations to commence Phase 3 clinical trials of their injectable therapy, VK2735, scheduled to begin before the end of June. The company has confirmed it currently possesses adequate drug supply to complete its Phase 3 testing program.
This strategic manufacturing partnership could position Viking to effectively meet market demand for their weight loss medication, should it receive regulatory approval. This foresight appears particularly prudent given the supply challenges initially faced by industry leaders Novo Nordisk and Eli Lilly with their respective obesity treatments.
However, the announcement triggered a decline in Viking’s share price during Tuesday morning trading. According to William Blair analyst Andy Hsieh, this market response might reflect investor concerns that the manufacturing deal could diminish Viking’s attractiveness as a potential acquisition target.
VK2735, which functions by targeting both GLP-1 and GIP gut hormones, has shown promising results in Phase 2 trials, demonstrating weight loss of 15% in study participants over approximately three months. These results suggest the drug could potentially compete with Eli Lilly’s successful Zepbound. Additionally, an oral version of VK2735 has shown early positive indicators.
Viking CEO Brian Lian expressed confidence in the partnership, citing CordenPharma’s established expertise in commercial peptide
manufacturing as key to meeting anticipated market demand. The manufacturing agreement’s scope includes capacity for 100 million autotinjector pens and an additional 100 million vial and syringe products for the injectable formulation.
The financial structure of the deal involves Viking making prepayments over a four-year period, which will be applied against future orders. Importantly, Viking maintains full rights to their drug throughout this arrangement. The company’s strong financial position, with $2.5 billion in cash and cash equivalents at the close of 2024, supports this significant investment.
Market analysts have offered mixed perspectives on the deal’s implications. While some investors may view it as a signal that Viking intends to remain independent, potentially disappointing those hoping for an acquisition, analysts like Stifel’s Annabel Samimy view the agreement positively. Samimy suggests it provides Viking with the flexibility to develop VK2735 independently while ensuring sufficient supply capacity for the high-demand obesity market.
The development occurs against a backdrop of intense competition in the obesity drug market, where established pharmaceutical companies have faced challenges meeting demand for their approved products. Viking’s proactive approach to securing manufacturing capacity demonstrates the company’s commitment to avoiding similar supply constraints, should their drug candidate succeed in clinical trials and receive regulatory approval.
Viking’s stock performance has been volatile, with shares reaching record highs last year amid speculation about potential acquisition interest. However, the company’s stock has experienced a nearly 40% decline this year, partially influenced by indicators suggesting Viking might pursue an independent path forward rather than seeking acquisition by a larger pharmaceutical company.