Viking Therapeutics Stock Slides After Merck Strikes GLP-1 Deal With Chinese Biopharma, Retail Unperturbed

Shares of Viking Therapeutics dropped about 9% on Wednesday morning, reaching a nearly 10-month low, dragged by worries of increased competition in the weight-loss drug market.

Merck & Co. and China-based Hansoh Pharma announced that they have entered into an exclusive global license agreement for HS-10535, a preclinical oral small-molecule GLP-1 receptor agonist aimed at treating metabolic disorders, including obesity. 

Merck will gain exclusive rights to develop, manufacture, and commercialize HS-10535, with Hansoh Pharma retaining co-promotion rights in China.

The deal will result in a pre-tax charge of $112 million, or $0.4 per share, to be included in GAAP and non-GAAP results in Merck’s fourth-quarter results, the company said.

Shares of Merck were trading marginally lower on Wednesday, while its retail sentiment on Stocktwits turned ‘extremely bullish’ on the news. 

Despite Viking’s own promising oral GLP-1 candidate, VK2735 — currently being studied for obesity and other metabolic conditions — the stock dip appeared to reflect broader concerns over how Merck’s move could affect Viking’s competitive positioning. 

The weight-loss drug market has become increasingly crowded, with Eli Lilly and Novo Nordisk already dominating with their own GLP-1 weight-loss drugs.

H.C. Wainwright analyst Joseph Pantginis reportedly suggested that the announcement could lead to increased investor focus on Viking’s GLP-1 programs, particularly VK2735, which has shown promising clinical results. 

VKTX poll message volume meter Dec 18 as of 10:30 am ET | source: Stocktwits

Retail sentiment on Stocktwits remained ‘extremely bullish,’ with most users confident that Viking has the upper hand, given its head start over HS-10535, which remains in preclinical stages.

A user on Stocktwits suggested that Merck’s entry into the market underscored Big Pharma’s growing interest in obesity treatment, which bodes well for Viking’s prospects.

Viking’s VK2735, a dual agonist of the GLP-1 and GIP receptors, has generated significant excitement among investors, bolstered by recent strong trial data. 

Viking is also developing other promising treatments in its pipeline, including therapy for MASH (metabolic-associated fatty liver disease) and an amylin program, which is set to begin Phase 1 trials next year. 

William Blair has predicted that Viking may soon be acquired by a larger pharmaceutical company, while Raymond James has praised VK2735 as a superior candidate to tirzepatide (Eli Lilly’s Mounjaro).

Viking’s stock has surged over 130% year-to-date.

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