M&A on the horizon? Viking Therapeutics extends rally
Shares of Viking Therapeutics (VKTX) continued surging Wednesday after the company reported positive mid-stage trial data for its experimental obesity drug. BTIG Director and Biotechnology Research Analyst Justin Zelin joins Yahoo Finance Live to discuss.
Zelin notes it's been a "great run" for Viking as the stock soared over 400% on the trial results, exceeding expectations. The 13-week study showed 15% weight loss, but Zelin notes this could reach 25 to 30% "after about a year." These efficacy levels are superior to similar products developed by rivals Eli Lilly (LLY) and Novo Nordisk (NOVO).
Zelin adds Viking's drug has dual benefits, exciting investors. With pharmaceuticals gaining greater investor attention lately, he sees the potential for a merger opportunity given the promising success of the company.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Angel Smith
Video Transcript
[AUDIO LOGO]
JOSH LIPTON: Shares of Viking therapeutics extending gains after data from the company's latest weight loss drug trial showed greater efficacy compared to competing products from Eli Lilly and Novo Nordisk. Joining us now is Justin Zelin BTIG Director Biotechnology Research Analyst.
Justin, it is great to have you on the show. And Justin, you're just the right guy to ask this, because I'm interested Justin as someone who really knows this space so well, what you kind of made of Viking's mid-stage data? I mean, obviously, investors were very, very excited about it. But I'm interested to get your take, Justin, what you made of it and what you think we're going to learn from the late-stage testing.
JUSTIN ZELIN: Absolutely. Well, thanks so much for having me on. It's been a great run for Viking Therapeutics here. The stock is up over 400% year-to-date. And it's been up about 140% since the company presented outstanding results from the phase II venture study of VK2735 in obesity yesterday morning.
The results exceeded both our expectations and the Street's expectations. This was a 13-week study. And we were expecting 7% weight loss as our base case scenario and over 8% as a bull case scenario. And they showed almost 15% weight loss, which is superior to both marketed drugs in this indication, both Novo Nordisk's Wegovy and Eli Lilly's Zyban, as well as developmental drugs at the same time point offering another competitor to the current commercial duopoly.
So moreover, we were also extremely impressed by the company's safety profile for this drug. Most of the GI side effects were mild to moderate. They occurred in the first week of treatment. And those side effects resolved as time went on. And the weight loss continued to progress throughout the study without plateau. So we'd expect that continued weight loss will occur here from the current study. And if the current rate continues, we could see greater than 25% or 30% weight loss after about a year.
JULIE HYMAN: So Justin, we know this is experimental thus far. And for those laypeople among us, who is almost everyone, except people like yourself, is this a different technology than-- a different platform than the GLP-1s? And how do these results compare with the results that we have seen-- have been seeing from that class of drugs?
JUSTIN ZELIN: Absolutely. So the GLP-1s is Novo Nordisk's franchise, that's semaglutide. This is a dual agonist, a more like Eli Lilly's tirzepatide, which they market as both Mounjaro for type 2 diabetes and Zepbound for obesity. So this has actually two targets both the GLP and the GIP axis, which offers more potency and more efficacy than the mono-agonist on GLP-1 alone.
What's so impressive about this data is this compound actually caused more weight loss than Eli Lilly's dual agonist tirzepatide. So they saw about a 7% weight loss around this time point. And Viking actually doubled that. They showed 15% around the same time point of 13 weeks. And that's why investors are so impressed here.
JOSH LIPTON: Justin, I want to get you out on this, when you think about Viking, is it a potential takeout target, Justin, in your opinion? And if so, what is there any thoughts about who the acquirer could be? Is there a company out there, maybe large cap pharma name where it would make sense financially and strategically?
JUSTIN ZELIN: Yeah. There's been a lot of speculation on M&A in this name. Obviously, it's a name that's of high interest to big pharma players. Look, the GLP franchises are doing over $4 billion a quarter in sales, tirzepatide's doing over $1 billion in quarters. So this is a high interest space that pharma is looking at. And you could imagine that players, such as Pfizer, who had an asset, they no longer are continuing with that asset, are paying close attention to the space currently.
