Viking Therapeutics Secures $150M Manufacturing Deal for Obesity Drug, Boosting Production Capacity

Viking Therapeutics has entered into a significant manufacturing agreement with CordenPharma, committing $150 million to ensure long-term supply for its promising obesity drug candidate, VK2735. This deal marks a crucial step in Viking's strategy to compete in the rapidly growing obesity treatment market, currently dominated by pharmaceutical giants Novo Nordisk and Eli Lilly.

Manufacturing Deal Details and Implications

The agreement between Viking and CordenPharma involves a $150 million prepayment plan over three years, which will be applied to future orders. This arrangement secures Viking an annual production capacity of more than 1 billion pills, 100 million autoinjectors, and 100 million vial and syringe products for both injectable and oral formulations of VK2735.

CordenPharma will provide dedicated capacity to manufacture "multiple metric tons" of VK2735 annually. This substantial production capability positions Viking to potentially meet significant commercial demand, should their drug candidate receive regulatory approval.

William Blair analysts have expressed enthusiasm about the deal, viewing it as a strategic move to mitigate future supply chain risks. However, the long-term nature of the agreement has led to speculation about its impact on Viking's potential as an acquisition target, causing a 10% decline in the company's stock price following the announcement.

Clinical Progress and Market Potential

VK2735, a dual GIP/GLP-1 agonist, has shown promising results in clinical trials. In a Phase II study, the injectable form demonstrated a mean weight loss of 14.7% after 13 weeks of treatment at the highest dose. The oral version achieved 8.2% weight loss after just 28 days in an earlier Phase I trial, exceeding analyst expectations.

Viking is currently conducting the Phase II VENTURE trial for the oral formulation and plans to initiate a Phase III study for the subcutaneous version in the second quarter of 2025. The company has confirmed it has sufficient drug supply to complete its Phase 3 program.

Analysts from William Blair have projected potential annual revenue of approximately $39 billion for Viking, based on the manufacturing capacity secured through the CordenPharma deal and pricing similar to Eli Lilly's Zepbound.

Industry Context and Competition

The obesity treatment market has seen significant growth, with Novo Nordisk's Wegovy generating about $8.5 billion in sales in 2024 and Eli Lilly's Zepbound bringing in $4.9 billion. Both companies initially faced supply challenges, highlighting the importance of Viking's proactive approach to securing manufacturing capacity.

Viking's progress in developing VK2735 has positioned it as a leading smaller company in the obesity treatment space, attracting attention as a potential acquisition target. While the CordenPharma deal may impact these prospects, analysts argue that securing API production and associated devices was a prudent move, regardless of any potential merger discussions.

As Viking advances its clinical programs and prepares for potential commercialization, the pharmaceutical industry watches closely to see how this emerging player will compete with established market leaders in the increasingly competitive obesity treatment landscape.