Viking Therapeutics’ New Manufacturing Contract: A Game Changer for Weight-Loss Drug VK2735
Introduction
Viking Therapeutics Inc. (VKTX) recently made headlines when its stock surged by 8% following the announcement of a significant manufacturing agreement with CordenPharma, a private Swiss company. This partnership marks a pivotal moment for Viking, particularly concerning its promising oral obesity drug VK2735, alleviating concerns that have lingered over the stock for quite some time.
Details of the Manufacturing Agreement
On Tuesday, Viking announced its broad agreement with CordenPharma, which entails the supply of both the active pharmaceutical ingredient (API) and the finished product of VK2735. This development is crucial as analysts have expressed concerns regarding Viking’s capability to produce the drug upon receiving regulatory approval. Currently, the company is conducting a Phase 2a dosing trial of VK2735, with expected data readouts being released in the latter half of the year. Moreover, a Phase 3 trial for an injectable form of VK2735 is set to commence in the first half of the year, further elevating anticipation around the drug’s future.
Market Position and Potential Impact
The introduction of VK2735 is anticipated to be transformative for the weight-loss drug market. Presently, the leading drugs in this space, such as those produced by Eli Lilly & Co. and Novo Nordisk, are available solely in injectable forms. The prevalence of injectable therapies can pose an inconvenience for many patients, making the oral delivery method of VK2735 particularly appealing.
Early trials for VK2735 showed promising results, prompting 16 out of 17 analysts to recommend “buy” ratings for Viking’s stock, while only one holds a “hold” position. This largely reflects confidence in the drug’s clinical differentiation and its substantial total addressable market.
Stock Performance and Expectations
Despite its potential, Viking’s stock has experienced a rocky period in 2025, falling by 27% year-to-date, a stark contrast to the S&P 500’s 5% decline. The market’s optimism surged following the announcement of the manufacturing deal, enhancing Viking’s outlook and removing significant uncertainties surrounding its scalability.
Truist analysts have emphasized that this agreement represents a considerable positive shift for Viking, positioning the company as potentially the third player to launch a branded GLP-1 drug. Joon Lee and his team characterized CordenPharma as an esteemed contract-development and manufacturing organization (CDMO), well-prepared for the rising demand for GLP-1 drugs. Remarkably, CordenPharma had previously secured a nearly $1 billion contract for new peptide production, indicative of its robust operational capacity.
Financial Implications and Future Projections
The contract entails prepayments of $150 million to Corden over the next three years, a commitment that analysts from William Blair view as a strategic investment that will be credited against future orders. Despite concerns that this investment could hinder a potential acquisition of Viking, analysts Andy Hsieh and Alexandra Ramsey deem it imprudent to halt acquisition discussions, given the critical need for API and associated components.
William Blair projects the contract could facilitate approximately 3.8 million patient doses annually for the injectable variant and 2.7 million doses for the oral form, resulting in a total of 6.5 million doses. Based on Eli Lilly’s pricing for its drug Zepbound, this equates to a staggering revenue opportunity of around $39 billion.
Strategic Significance and Market Demand
The potential impact of this manufacturing deal cannot be overstated. Raymond James analysts have affirmed that securing CordenPharma’s partnership is pivotal, particularly in the context of ongoing shortages of GLP-1 drugs, which have already affected sales in the obesity drug market.
Ryan Deschner and his team at Raymond James applauded this strategic move, emphasizing its role in ensuring the uninterrupted availability of VK2735. As the market grapples with supply challenges, Viking’s proactive approach could position it favorably within the sector.
Conclusion
Viking Therapeutics has taken a monumental step towards advancing its pipeline of therapeutic solutions with VK2735. The new manufacturing agreement with CordenPharma not only alleviates concerns regarding production capabilities but also positions Viking as a formidable contender in the weight-loss and GLP-1 drug space. With favorable analyst ratings and significant market potential, VKTX appears set for a potentially lucrative path ahead, leveraging both the oral and injectable formulations of its promising therapy. The future of Viking Therapeutics looks bright as it continues to navigate through the complexities of the pharmaceutical landscape.