Viking's obesity bet now has the cash to reach phase 3 data

The technology

Viking is a clinical-stage company with no product revenue. Its lead drug, VK2735, is a dual agonist of the GLP-1 and GIP receptors, two gut hormone targets. It is being developed as a weekly injection in two phase 3 VANQUISH trials and as a daily tablet in two phase 3 SUNRISE trials that started in October.

The company is also testing whether patients can keep weight off on less frequent shots. In a phase 1 study, patients who switched from weekly to monthly dosing kept 85% of their weight loss over 12 weeks, against 61% on placebo. Its second drug, VK3019, is a dual amylin and calcitonin receptor agonist that entered phase 1 in June.

The odds

The injectable program carries the lowest risk. VK2735 has produced large weight loss in earlier trials, including 16% to 19% at 21 weeks in the maintenance study. Across the industry, phase 3 programs reach a filing 57.8% of the time and filings reach approval 90.6% of the time. Phase 3 must still show durable weight loss and tolerability over 78 weeks in thousands of patients.

The oral program has more uncertainty. The phase 3 doses of 27.5 mg to 55 mg are below the 90 mg and 120 mg doses that gave the best phase 2 results, and that trial lasted only 13 weeks. VK3019 faces the usual phase 1 odds of about 7.9%.

The money

Viking had $502 million in cash and short-term investments at June 30. It lost $128.0 million in the second quarter and $286.3 million in the first half. In September it sold stock at $35.00 and 2% convertible notes due 2032. At pricing, Viking estimated combined net proceeds of about $548 million if underwriters fully exercised their options, which its closing announcement said they did. The notes convert at about $50.75 per share. Viking did not give cash runway guidance in its second-quarter release or in the offering releases, so the length of runway depends on how fast the oral trials enroll.

The risks

The first risk is the VANQUISH readout itself. Viking has not given a date for results, and weak weight loss or poor tolerability would hurt the company's main asset.

The second is commercial. Viking has no approved product and no sales force. It would need to build one or find a partner, and it has not announced a partner. Its September raise was partly earmarked for commercialization of VK2735.

The third is spending. With four phase 3 trials running and R&D near $116 million a quarter, the new cash buys time but not unlimited time, and the notes add about $259 million of debt due in 2032 if they do not convert.

Our read

Viking has built a broad program around one molecule, with weekly, monthly and oral options in testing. The maintenance data are small but point to a dosing advantage that could matter for long-term use. The September raise means the company can reach its phase 3 results without an urgent need for more money. The hiring of Hubert Chen as chief medical officer in June, a former Amylin Pharmaceuticals obesity researcher, also adds late-stage and regulatory experience as the company moves its programs forward and prepares for possible filings.

Everything still depends on VANQUISH. Until those 78-week results arrive, Viking's value rests on whether VK2735 delivers in phase 3 what it showed in shorter trials, and on whether a company without a sales force can bring it to market.