Viking Therapeutics (NASDAQ: VKTX) didn’t quite capture the hearts of investors in the last month of 2024. The biotechnological the company’s share price fell by 24% in December, primarily due to aggressive moves by rivals in a potentially very lucrative segment of the pharmaceutical market.
That rival is big and determined: a global pharmaceutical company Merck (NYSE: MRK).
In mid-December, Merck announced that it had entered into a licensing agreement with Chinese biotech Hansoh Pharma for the company’s investigational weight-loss drug. If successfully developed, the drug, designated HS-10535, would certainly pose a serious threat to Viking’s first production program, VK2735. This is also a remedy for obesity; it has been well tested in clinical trials and is relatively advanced in the development process.
It is also an oral treatment, which gives it an advantage over competing products on the US market that are already FDA-approved for this disorder. These are Novo Nordisk‘s Wegovy i Eli Lilly‘s Zepbound, both of which are delivered by injection.
Merck’s deal with Hansoh gives the former company exclusive global licensing rights to HS-10535, which is currently in development. Merck has already committed quite a bit to this, signing a $112 million upfront deal. The company has also agreed to pay its Chinese partner as much as $1.9 billion in major payments and royalties, assuming, of course, that the drug ultimately makes it to market.
The stakes are high in the weight loss game. With only two GLP-1 drugs approved specifically for weight loss in the US, the market is still wide open. Meanwhile, such drugs are enjoying great popularity in a country known for its high obesity rates. Americans love the idea that they can ditch diet and exercise in favor of simply taking a weight-loss drug. So the demand is currently very high and should remain so.
While Viking investors are rightfully worried about Merck’s move — the company is big, powerful, and clearly has an agenda — I wouldn’t be ready to throw in the towel just yet. HS-10535 still has a long way to go in its development cycle and there is no telling how effective it will ultimately prove to be.
VK2735, therefore, seems like a better bet to reach the holy grail of commercialization. Considering that it is an oral treatment and not injections, it is certain that it will be the best treatment from the very beginning.
