Pfizer’s Metsera Acquisition Ignites Weight Loss Race - Why Viking Therapeutics Investors Are Celebrating

Big Pharma just placed its biggest bet yet on the obesity drug gold rush.

Pfizer's bombshell Metsera acquisition signals pharmaceutical giants are all-in on metabolic treatments - sending shockwaves through the biotech sector that have Viking Therapeutics shareholders popping champagne.

The Domino Effect

When industry titans start swallowing weight-loss biotechs whole, it validates the entire therapeutic category. Viking suddenly looks like the most attractive remaining independent player in a field that's drawing nine-figure buyouts.

Market Math

Pfizer's move sets a new valuation floor for metabolic treatment developers. With Metsera off the board, Viking becomes the prime acquisition target for pharma companies late to the obesity party - creating instant shareholder value without lifting a finger.

The Cynical Take

Nothing makes legacy finance happier than a good old-fashioned bubble - and watching pharmaceutical giants overpay for preclinical assets while retail investors FOMO into the sector has hedge funds placing their short bets already.

One acquisition just reshuffled the entire weight-loss drug landscape. Viking's pipeline suddenly looks like the last remaining trophy asset - and its shareholders know it.

Image source: Getty Images.

Viking's weight loss program

So, first, a quick summary of Viking's path so far. The company specializes in the development of potential drugs for weight loss and endocrine conditions. The weight loss portfolio is anchored by VK2735, a candidate the company is studying in two separate studies -- in injectable format and pill format. The former is involved in a phase 3 study right now, while the latter is involved in a phase 2 study.

VK2735 is a dual GIP/GLP-1 receptor agonist, similar to the commercialized drugs sold by Lilly and Novo Nordisk. These drugs act on hormones involved in digestion and are known to regulate appetite and blood sugar levels. In a phase 2 dosing trial, Viking's oral candidate resulted in average weight loss of as much as 12.2% over 13 weeks. The injectable candidate in phase 2 generated weight loss of as much as 13.1% during that same time period.

This news, initially announced early last year, pushed the stock into the stratosphere -- Viking saw its shares soar 121% in one trading session. The stock since has given up those gains, though the company's clinical development program continues to progress and deliver positive results.

Approaching the finish line

Meanwhile, as mentioned, some investors imagined Pfizer might make an offer for Viking, considering the biotech's promising program and the fact that, with a phase 3 trial now underway, it's nearing the finish line.

Pfizer opted for Metsera, a company that, like Viking, has several weight loss candidates in the pipeline -- but may be farther from the finish line. Metsera's most advanced candidate, MET-097i, is involved in a phase 2b trial. This candidate's advantage is it's being developed for once-monthly dosing -- versus the current standard of weekly. In the phase 1/2 trial, it resulted in 7.5% reduction in weight after 36 days.

It's difficult to compare the Viking and Metsera candidates, since so many factors differ across trials -- only head-to-head comparisons, involving the same parameters, may offer a clear picture.

A $7.3 billion deal

However, we can say that Pfizer bought an earlier-stage company in a deal that could total as much as $7.3 billion. That includes a $47.50 per-share purchase price -- a 43% premium from the previous closing price -- as well as a contingent value right based on future achievements that could represent a value of $70 per share.

Today, Viking trades for less than $25 a share and has a market cap of $2.8 billion. Shareholders might be cheering at the moment, as the Pfizer-Metsera deal could imply that Viking is greatly undervalued -- and may be worth much more, considering the strength of its candidates and the idea that regulatory review might be on the horizon.

This is positive news for Viking and its shareholders -- whether the company accepts any eventual takeover offer or decides to go it alone in the billion-dollar weight loss market.