Viking Stocks Plummet Following Merck's Deal with Hansoh Pharma

Viking shares fell 5.5% following the announcement of a licensing agreement between Hansoh Pharma and Merck. According to the terms of the agreement, Merck will obtain a global exclusive license to develop, manufacture, and commercialize HS-10535, a candidate for the treatment of metabolic disorders.

The agreement announced today includes a $112 million upfront payment to Hansoh Pharma from Merck and potential milestone payments that could reach up to $1.9 billion. These payments are contingent on the development, regulatory approval, and commercialization stages of HS-10535. Additionally, Hansoh Pharma will receive royalties from sales and retains the option to co-promote the product in China or commercially exploit it exclusively under certain conditions.

Viking's own metabolic disorder candidate, VK2735, has shown promising results in early clinical trials, demonstrating a positive safety profile and signs of clinical benefit. However, the agreement between Hansoh Pharma and Merck introduces a potential competitor to Viking's product, which may explain the market's reaction to the news.

Eliza Sun, CEO of Hansoh Pharma, expressed confidence in the partnership, emphasizing Merck's established presence in the field of cardiometabolic diseases and the potential to expedite the global development of HS-10535. Merck plans to include the upfront payment as a pre-tax expense in its fourth quarter 2024 results, which will impact both GAAP and non-GAAP earnings per share by $0.04.

Investors seem to be evaluating the impact of this new partnership on Viking's position in the metabolic disorder treatments market. The market's response appears to be driven by the details of the Hansoh Pharma-Merck agreement and its perceived implications for Viking's future prospects in the competitive landscape of metabolic disorder therapies.