potential victory claimed by Viking Therapeutics over Eli Lilly in the pharmaceutical arena
This year, Eli Lilly (LLY 5.34%) has been dominating the pharmaceutical scene, turning into the world's most active pharmaceutical company in my opinion. Besides the remarkable growth of its diabetes and obesity management treatments, Lilly has also scored some significant victories from the Food and Drug Administration (FDA), such as approval for both its Alzheimer's disease candidate and eczema drug.
However, even as Lilly appears to be entering a new phase of expansion, a significant competitor is lurking in the shadows – I'm not referring to Novo Nordisk.
Viking Therapeutics (VKTX 4.71%) is a clinical-stage pharmaceutical company that has been interested in the weight loss market for quite some time now. During its third-quarter earnings call a few weeks ago, Viking's top brass disclosed some compelling information, which would undoubtedly grab the attention of Lilly's executives.
Here is a breakdown of how Viking might become a powerful competitor in the weight loss market:
Did Viking manage to outsmart Lilly?
Currently, Viking has no treatments authorized by the FDA. Nonetheless, its lead obesity candidate, VK2735, has generated considerable interest and is viewed as one of the more promising medications that could disrupt mainstream weight loss treatments if it gets approval.
Viking is conducting tests on VK2735, both as an injectable and oral formulation. As per the company's latest update, the injectable form of VK2735 is progressing towards a phase 3 clinical trial towards the end of the year. Similar to Lilly's weight loss treatments (Mounjaro and Zepbound), VK2735 is a dual glucagon-like peptide 1 (GLP-1) and glucose-dependent insulinotropic peptide (GIP) receptor agonist.
However, during Viking's third-quarter financial update, the company's management hinted at a new development in the pipeline that could pose a significant threat to Lilly. Namely, Viking is in the initial stages of a new clinical initiative focusing on a dual agonist that activates both the amylin and calcitonin receptors. Amylin is a hormone that helps regulate blood sugar levels and curb appetite, while calcitonin is a metabolic hormone.
During the earnings call, Viking CEO Brian Lian shared that one of the objectives of the dual amylin-calcitonin agonist is to "combine it successfully with VK2735 or other drugs in development."
In essence, Viking could be on the brink of developing a four-pathway weight loss drug that incorporates the GLP-1/GIP-1 receptors in VK2735 with a new agonist that stimulates amylin and calcitonin hormones.
What should Eli Lilly consider?
As mentioned earlier, Lilly's Mounjaro and Zepbound are dual agonists for GLP-1 and GIP-1 receptors. Lilly has also been developing another weight loss drug called retatrutide, which targets GLP-1, GIP-1, and glucagon hormones.
During Viking's third-quarter earnings call, Lian stated that the amylin program would likely be most advantageous "in conjunction with another mechanism" because "what you see is a significant improvement in effectiveness when you add it on top of another mechanism. With a GLP-1, you see a 50% increase or so. So if you were to add it on to a dual agonist, and it showed a similar improvement, that would likely be the best efficacy profile in the industry."
In other words, Viking's combination therapy might outperform Lilly's triagonist approach. If this is the case, Viking's unique weight loss treatment could propel it to quickly gain market share in the weight loss market and slow down Lilly's growth.
An important note
At first glance, it might seem that Viking is on the cusp of major disruption. However, as I frequently remind investors, it's essential to step back and consider the broader picture.
Keep in mind, Viking hasn't yet received FDA approval for any of its weight loss treatments. Although the combination of VK2735 with another dual receptor is intriguing, this pursuit will require a considerable amount of time-consuming and expensive clinical trials and research over several years.
Consequently, I would not be overly concerned if I were in Lilly's position.
Despite Viking Therapeutics' promising lead obesity candidate VK2735 and its potential to disrupt mainstream weight loss treatments, it's important for Eli Lilly to remember that Viking has yet to receive FDA approval for any weight loss treatments. This means that while Viking's combination therapy may be intriguing, it requires extensive and time-consuming clinical trials and research, necessitating significant investment of resources. In the realm of finance and investing, it's crucial for Lilly to closely monitor Viking's progress but not to overlook its own stable position in the market.
