Novo Nordisk and Eli Lilly now dominate the development of drugs for metabolic disorders such as diabetes and obesity, but a pair of smaller challengers attracted keen interest from investors and analysts this past week after announcing positive clinical data that, if confirmed in later trials, could give the leaders a run for their money.
Shares of Viking Therapeutics (VKTX) more than doubled, rocketing 146% over two days after the San Diego biotech announced positive topline results from its Phase II VENTURE trial (NCT06068946) evaluating its lead clinical candidate VK2735 in patients with obesity.
VK2735 met the study’s primary endpoint of statistically significant percent change in body weight from baseline to Week 13 among patients treated with the drug compared with placebo—between 9.1% for the 25 patients treated with a 2.5 mg dose, to 14.7% for the 35 patients randomized to the maximum dosage of 15 mg. Between 39% and 88% of patients in the four treatment arms of various dosages of VK2735 achieved greater than 10% weight loss, compared with 4% for placebo.
Patients receiving VK2735 also demonstrated statistically significant reductions in mean body weight relative to placebo, with the mean weight loss percentage change from baseline ranging from 9.1% for the 2.5 mg dose, to 13.1% for the 15 mg dose—compared with just 1.7% for placebo patients.
None of the four dosages showed any evidence of a plateau in weight loss at Week 13—a finding that according to the company suggests that further weight loss might be achieved from extended dosing periods.
“We look forward to progressing this important therapy into further clinical development later this year,” Viking CEO Brian Lian, PhD, said in a statement.
So too do investors, judging from their response to Viking’s data. Investors sent the company’s shares soaring 121% from $38.48 to $85.05 on Tuesday—the company’s biggest-ever one-day gain—followed by an 11% gain to $94.50 on Wednesday. After a day’s profit-taking 18% drop Thursday, Viking shares climbed back nearly 14% on Friday, from $77.05 to $85.22.
Viking quickly cashed in on the surging stock through a public offering designed to raise $550 million by selling 6.471 million shares of common stock at $85 a share. That amounts to approximately $519.4 million in net proceeds—a figure that would rise to approximately $597.4 million if underwriters exercise in full their 30-day option to purchase up to 970,650 additional shares at the offering price.
The VENTURE topline results constitute one of two data readouts planned this quarter for VK2735, a dual agonist of both the glucagon-like peptide 1 (GLP-1) and glucose-dependent insulinotropic polypeptide (GIP) receptors. Viking said it remains on track to report data from a Phase I study (NCT05203237) assessing an oral formulation of VK2735.
“Best in class,” says analyst
“It is our view that the magnitude of placebo-adjusted weight loss of 13.1%, at the highest 15 mg dose, reflects a best-in-class profile among approved and investigational agents with Phase II data,” Andy T. Hsieh, PhD, a biotechnology analyst with William Blair, wrote Tuesday in an investor note.
He compared VK2735 to Lilly’s marketed drug Zepbound® (tirzepatide), indicated for obese or overweight adults with weight-related comorbidities. Like VK2735, Zepbound is designed to work by activating both GIP and GLP-1 hormone receptors. Zepbound, by comparison showed roughly 7% placebo-adjusted weight loss over 12 weeks in clinical studies.
“We are shifting our stance to believe VK2735 has the potential to exhibit a potentially better efficacy profile relative to Zepbound (previously, our base case was that they are clinically equivalent),” Hsieh wrote.
How much better will depend on what additional data Viking presents at an upcoming conference. According to Hsieh, that’s likely to be the American Diabetes Association’s 84th Scientific Sessions, to be held June 21–24 in Orlando, FL.
Hsieh also raised Blair’s peak sales estimate for VK2735 to $14.4 billion in the United States and $7.2 billion in Europe, up from the firm’s previous estimates of $10.1 billion and $3.6 billion, respectively.
He added that Viking may want to consider finding a larger partner for developing VK2735: “Ultimately, we believe that the value of VK2735 will be maximized in the hands of a big pharma, which could best navigate the rebate/discount-driven reimbursement landscape.”
One factor why VK2735 may have outperformed Zepbound: A ”markedly” more aggressive titration protocol, according to Akash Tewari, an equity research protocol with Jefferies.
“This undoubtedly looks like a very competitive product,” Tewari said of VK2735. “Now, should this meaningfully impact LLY?”
No, according to Tewari, for three reasons:
- VK2735likely won’t reach the market until 2029 or later.
- Given the supply issues associated with meeting growing market demand for injectable GLP-1 drugs, there’s likely room for multiple players.
- Efficacy at higher doses of VK2735could decrease if Viking carries out slower titration of the drug.
Viking’s data led analysts at seven other firms to raise their 12-month price targets on the company’s stock, by double or higher. The highest jump was the nearly quadrupling (275%) from $28 to $105 by Thomas J. Smith of Leerink Partners and colleagues.
Smith said the data “positions VK2735 as one of the most promising GLP-1/GIP compounds in clinical development with an attractive balance of efficacy/tolerability that compares favorably across the competitive landscape,” and “increases the perception of strategic optionality, given the substantial large pharma/biotech interest in the >$150bn global market opportunity for obesity therapeutics.”
“Overall, we are encouraged with the strong topline results for VK2735, which we believe suggests the potential for class-leading efficacy in obesity compared to other incretins,” Smith added.
The other six firms to raise their price targets:
- Joon Lee (Truist Securities)—More than triple (216%), from $38 to $120; maintains “Buy” rating.
- Steven Seedhouse (Raymond James)—More than triple (211%), from $37 to $115; maintains “Outperform” rating.
- Joseph Pantginis (H.C. Wainwright)—Nearly triple (173%), from $33 to $90; maintains “Buy” rating.
- Jay Olson (Oppenheimer)—More than double (152%), from $46 to $116; maintains “Outperform” rating.
- Naz Rahman and Jason McCarthy (Maxim Group)—More than double (140%), from $50 to $120; maintains “Buy” rating.
- Annabel Samimi (Stifel)—More than double (129%), from $35 to $80; maintains “Buy” rating.
- Thomas J. Smith (Leerink Partners)—Nearly quadruple (275%), from $28 to $105; maintains “Outperform” rating.
“Venture doesn’t just unlock the value door, it kicks it in,” Seedhouse wrote in a research note, as reported by Dow Jones.
ZEAL: Crushing it in MASH
A day before Viking’s conquest of Wall Street, Zealand Pharma (ZEAL)—which like Novo Nordisk is based in Denmark—wowed investors with positive data on February 26 showing that survodutide (BI 456906), the glucagon/glucagon-like peptide 1 (GLP-1) receptor dual agonist it is co-developing with Boehringer Ingelheim, met its primary endpoint in a Phase II trial (NCT04771273).
Up to 83% of adults treated with the drug achieved statistically significant improvement of metabolic dysfunction-associated steatohepatitis (MASH) following 48 weeks of treatment—compared with 18.2% of patients randomized to placebo (18.2%).
That improvement in MASH came without worsening of fibrosis stages F1, F2, and F3 (mild to moderate or advanced scarring), according to Zealand and Boehringer Ingelheim. Even better for Zealand and Boehringer, survodutide met all of the trial’s secondary endpoints, including statistically significant improvement in liver fibrosis. Full data will be presented later in the first half of the year at an unspecified scientific conference.
The trial results touched off a buying surge among investors, who sent Zealand shares climbing 36% on Monday, from DKK 478 ($69.50) to DKK 648.50 ($94.29). After a profit-taking 4% dip to DKK 620 ($90.14) on Tuesday, Zealand shares bounced back 7% the following two days, closing Thursday at DKK 664 ($96.54) before dipping again %, to DKK 649 ($94.36).
Facing disruption
The growing field of MASH drug candidates faces disruption this month: Madrigal Pharmaceuticals faces an FDA target action date of March 14 for its NDA for resmetirom as a treatment for adult patients with MASH with liver fibrosis. If approved, resmetirom would be the first treatment approved by the agency for that indication.
In addition to MASH—the liver disorder formerly known as nonalcoholic steatohepatitis (NASH)—survodutide is also in development as a treatment for overweight or obese patients, where it is under study in no fewer than five Phase III trials.
“Positive Phase IIb data for survodutide (GLP-1/Glu) in liver disease MASH support potential for a differentiated liver profile when treating obesity,” Lucy Codrington, an equity analyst with Jefferies, and four colleagues wrote in a research note February 26.
Two days later, Codrington and colleagues more than doubled her firm’s peak annual sales forecast for survodutide, to $10 billion from $4.5 billion last summer.
“Survodutide’s potential to improve liver scarring could help drive uptake given the overlap of liver disease with obesity,” Codrington and colleagues wrote. “Phase IIb survodutide data showing a significant improvement in liver fibrosis when treating liver disease MASH is a potential first for a GLP-1 based approach.”
Codrington and colleagues did caveat their findings by citing several differences between Zealand’s trial and those of Lilly and Novo Nordisk:
- Zealand’s survodutide trial included F1 fibrosis patients, compared with F2 and F3 patients only for Novo Nordisk and Lilly trials of semaglutide and tirzepatide, respectively.
- Zealand’s biopsy read protocol was not known, with one-reader potentially associated with higher placebo response (Lilly was dounle-read);
- Zealand’s primary endpoint was MASH improvement, defined as “decrease of at least 2 points in NAS with at least 1 point decrease in NAS subscore of either lobular inflammation or ballooning.” Novo Nordisk assessed semaglutide and Lillt, tirzepatide based on MASH resolution, defined as lobular inflammation of 0 or 1 and hepatocellular ballooning reduced to 0;
- Zealand’s fibrosis endpoint was a one-stage improvement in fibrosis, whereas the semaglutide and tirzepatide trials used ≥1 stage improvement with no worsening of NASH.
Despite the differences, Codrington and colleagues concluded: “We view ZEAL as a key player in next wave of obesity therapeutics, expecting shares to continue to appreciate aided by near-term catalysts.”
Leaders and laggards
- Gritstone Bio (GRTS) shares tumbled 28% on Friday, from $2.80 to $2.02, after announcing plans to eliminate 40% of its workforce. The move came more than two weeks after Gritstone said its planned 10,000-participant Phase IIb CORAL-BARDA trial, designed to assess its self-amplifying mRNA (samRNA) vaccine for COVID-19, would be delayed from Q1 to fall 2024, to ensure the use of fully GMP-grade materials in manufacturing. Gritstone said the delay resulted in the company not receiving its first tranche of funding from a $433 million contract awarded to the company by the Biomedical Advanced Research and Development Authority (BARDA) through its Project NextGen, designed to fund development of next-generation vaccines and drugs. “The company expects to incur aggregate cash expenditures of approximately $2.5 million, primarily related to employee severance and benefit costs associated with the workforce reduction,” Gritstone stated in a regulatory filing.
- Kineta (KA) shares plunged 64% on Thursday, from $2.26 to $0.82, after the company said it will eliminate 64% of its workforce—seven positions—including CEO Shawn Iadonato, PhD, who will continue to serve on the company’s board; and Pauline Kenny, Kineta’s general counsel and secretary. The job cuts are part of a restructuring designed to substantially reduce expenses and preserve cash. In addition to reducing its workforce, Kineta is terminating enrollment of new patients in its ongoing Phase I/II VISTA-101 trial (NCT05708950) evaluating KVA12123 in patients with advanced solid tumors. “The company has made this decision, in part, because certain investors have indicated they will not fulfill their funding obligations pursuant the previously disclosed second tranche of the company’s contemplated private placement later this year,” Kineta said.
