Merck & Co. recently announced a global licensing agreement with Hansoh Pharma for HS-10535, a preclinical oral GLP-1 receptor agonist for obesity. This news impacted Viking Therapeutics (VKTX), a company viewed as a potential acquisition target for Merck. This article explores the connection between Merck’s licensing deal and the subsequent decline in Viking Therapeutics’ stock price.
Merck’s agreement with Hansoh Pharma involves an upfront payment of $112 million and potential milestone payments reaching $1.9 billion, plus royalties. While Hansoh retains co-promotion rights in China, Merck secures global development, manufacturing, and commercialization rights. This deal underscores Merck’s commitment to the obesity treatment market.
William Blair analysts suggest that this licensing agreement, while significant, doesn’t preclude Merck from pursuing further acquisitions in the obesity space, including a potential acquisition of Viking Therapeutics. However, the market reacted to the news with a sell-off of Viking Therapeutics stock, likely driven by the perception that Merck might now be less inclined to acquire Viking.
Viking Therapeutics is developing VK2735, a promising GLP-1/GIP dual agonist for obesity treatment. Its potential advantages include monthly dosing and the possibility of oral formulation. This asset, along with Viking’s amylin program, makes the company an attractive acquisition target for pharmaceutical companies seeking to expand their obesity treatment portfolios. Despite the recent stock dip, William Blair maintains an “Outperform” rating on Viking Therapeutics, citing the long-term potential of VK2735.
The recent decline in Viking Therapeutics’ stock price reflects investor reaction to Merck’s licensing deal with Hansoh Pharma. While the deal itself doesn’t eliminate the possibility of a future Viking acquisition, it introduces uncertainty into the market. Viking Therapeutics remains a compelling player in the obesity treatment field, particularly due to the potential of VK2735. The company’s future performance will likely depend on clinical trial results and the evolving competitive landscape.
The evolving landscape of the obesity treatment market and the potential for further partnerships or acquisitions will continue to influence Viking Therapeutics’ stock performance. While the recent news created volatility, the long-term prospects of Viking Therapeutics and its innovative treatments remain a key focus for investors and analysts. William Blair’s continued optimism reinforces the belief in Viking’s underlying value and potential for future growth.
