Two corporations stand on the heart of the weight problems drug market proper now. Novo Nordisk continues to rake in cash from its weight-loss drug Wegovy (and from off-label utilization of its kind 2 diabetes drug Ozempic.) Eli Lilly is scorching on Novo Nordisk’s heels with its new weight problems drug Zepbound.
Pfizer (NYSE: PFE) stays on the skin wanting in with this huge alternative. However that does not need to be the case. Ought to Pfizer purchase Viking Therapeutics (NASDAQ: VKTX) to tackle Lilly and Novo Nordisk within the obesity-drug market?
The downsides of a deal to accumulate Viking
Let’s first take a look at the potential downsides to Pfizer buying Viking. One particularly stands out: Pfizer already has two weight-loss candidates in its pipeline — danuglipron and PF-07976016. The latter solely not too long ago superior into scientific testing, so it has an extended solution to go. Danuglipron, although, is farther alongside in growth.
Granted, the security profile for danuglipron in Pfizer’s section 2 scientific research of the drug wasn’t nice. Greater than 50% of sufferers within the trial dropped out. As much as 73% of individuals skilled nausea. Nevertheless, these outcomes had been for a twice-daily dose. Pfizer plans to maneuver ahead into late-stage testing with a once-daily dose of the oral weight problems drug.
There’s additionally extra pipeline overlap between Pfizer and Viking. Pfizer is evaluating ervogastat in section 2 testing and PF-07853578 in section 1 testing for the therapy of nonalcoholic steatohepatitis (NASH) with liver fibrosis. Viking has a NASH candidate in section 2 scientific trials too — VK2809.
Buying Viking would wipe out a lot of Pfizer’s remaining money stockpile. On the finish of 2023, Pfizer’s money, money equivalents, and short-term investments totaled round $21 billion. If we assume that the corporate must pay not less than a 50% premium to Viking’s present valuation, a deal would price Pfizer within the ballpark of $10 billion to $11 billion. The large drugmaker might arguably discover higher methods to speculate its cash.
Why Pfizer would possibly contemplate shopping for Viking
Regardless of these objections, Pfizer might nonetheless discover a buyout of Viking Therapeutics engaging. Why? Danuglipron might flop even with a once-daily dose. In the meantime, Viking’s VK2735 subcutaneous injection sailed by way of section 2 testing with incredible security and efficacy, and the biotech is evaluating an oral model of the drug in a section 1 scientific trial.
Some analysts challenge that the worldwide weight problems drug market might attain and even high $100 billion by 2030. That is too huge of a chance for Pfizer to threat ceding to Lilly and Novo Nordisk. If the corporate has any qualms about danuglipron, buying Viking could possibly be a terrific backup plan.
Pfizer has been clear that enterprise growth is a key a part of its development technique. The corporate expects roughly $25 billion in new annual income from its dealmaking by 2030. Even with its acquisitions lately of Seagen, Enviornment, Biohaven, and International Blood Therapeutics, Pfizer is nearly actually nonetheless in search of engaging buyout candidates.
I doubt that the overlap of NASH applications can be an enormous impediment for Pfizer in buying Viking. Neither ought to value be a big concern, except a bidding struggle erupts between a number of huge drugmakers.
The most effective wager is a “weight-loss wait”
So ought to Pfizer purchase Viking? I feel the corporate’s finest wager is what we would name a “weight-loss wait.” Pfizer expects to have pharmacokinetic knowledge for danuglipron throughout the subsequent few months, which ought to assist decide its technique in shifting ahead with a once-daily formulation.
However what if one other participant tries to purchase Viking within the meantime? Pfizer might contemplate different acquisition candidates if it selected to not bid for Viking. For instance, Altimmune reported promising ends in November 2023 from a section 2 research evaluating pemvidutide in weight reduction. Even after its shares skyrocketed by round 350% over the past six months, Altimmune’s market cap continues to be beneath $600 million.
I would not rule out the opportunity of Pfizer buying Viking Therapeutics. Nevertheless, I would not wager on it both. Then again, no matter what occurs subsequent with the massive pharma’s enterprise growth efforts, Pfizer inventory rebounding seems to be like a superb wager.
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Keith Speights has positions in Pfizer. The Motley Idiot has positions in and recommends Pfizer. The Motley Idiot recommends Novo Nordisk. The Motley Idiot has a disclosure coverage.
Ought to Pfizer Purchase Viking Therapeutics to Tackle Eli Lilly and Novo Nordisk within the Weight problems Drug Market? was initially revealed by The Motley Idiot
