Analysts acknowledged the long-term manufacturing deal could dull Viking’s takeout prospects but hailed it as a smart move to ensure supply.
Viking Therapeutics is putting $150 million down to secure future supply of “multiple metric tons” of its investigational obesity medication VK2735. The deal will set up an annual capacity of more than 1 billion pills, 100 million autoinjectors and 100 million vial and syringe products.
William Blair analysts are “enthusiastic” about the manufacturing deal, which was signed with contract development and manufacturing organization CordenPharma. The analysts said in an investor note Tuesday that the pre-payment plan protects Viking from future supply chain risk “which had been an overhang on the stock.”
Viking will make $150 million in prepayments over three years, which will be applied to future orders. Corden will provide dedicated capacity to manufacture “multiple metric tons” of VK2735 annually, according to Viking’s Tuesday morning press release. The deal includes injectable and oral formulations of the medicine, both of which are being tested in clinical trials right now. The companies have long worked together, according to Viking CEO Brian Lian.
The biotech has risen to prominence as one of the leading smaller companies tackling obesity, behind market leaders Novo Nordisk and Eli Lilly. Analysts and investors have long speculated that Viking is a top takeout target. Wiliam Blair acknowledged that this long-term deal with Corden may disappoint some hoping for that high-profile exit.
Indeed, Viking’s shares declined 10% as the markets opened Tuesday to $25.16, representing a low point for the stock, which began the year around $40 apiece.
“We acknowledge that investors could view the deal as a negative development with respect to Viking’s takeout prospects; however, we do not share this view. Given the importance of procuring API and the associated devices and accessories, we argue it would be imprudent to delay such discussions even if Viking was theoretically in late-stage discussions with an acquirer,” William Blair wrote.
The analysts also took a shot at quantifying the possible sales that could result from the Corden deal. The injectable portion amounts to about 3.8 million patient doses a year, while the 1 billion tablets equal about 2.7 million patient doses, for a total of 6.5 million doses. Using pricing similar to what Lilly has offered through its LillyDirect program for Zepbound—about $500 per month or $6,000 per year—William Blair predicted that Viking has set itself up for about $39 billion in revenue.
Zepbound brought in $4.9 billion in 2024, while Novo’s Wegovy clocked about $8.5 billion. The latter had generated 200,000 prescriptions as of the end of the year.
“Taken together, we are bullish on the deal and believe it removes one of the major uncertainties, based on our discussion with investors,” William Blair said of the Viking manufacturing deal.
Viking is testing two formulations of VK2735. The Phase II VENTURE trial is currently underway testing the oral version dosed twice daily for 13 weeks. The biotech is also working on kick starting a Phase III test of the subcutaneous formulation in the second quarter of 2025.
In an earlier Phase I trial, the pill version of VK2735 achieved 8.2% weight loss after just 28 days, exceeding analyst expectations.
