Viking shares tumble after Merck inks deal with Hansoh Pharma

Investing.com -- Viking shares fell 5.5% following the announcement of a licensing agreement between Hansoh Pharma and Merck (NS:PROR ). Under the terms of the deal, Merck will obtain an exclusive global license to develop, manufacture, and commercialize HS-10535, a candidate for the treatment of metabolic disorders.

The agreement, disclosed today, involves an upfront payment of $112 million from Merck to Hansoh Pharma, with potential milestone payments reaching up to $1.9 billion. These payments are tied to the development, regulatory approval, and commercialization stages of HS-10535. Additionally, Hansoh Pharma is poised to receive royalties on sales and retains the option to co-promote or exclusively commercialize the product in China under certain conditions.

Viking's own metabolic disorder candidate, VK2735, has shown promise in early clinical trials, with a favorable safety profile and indications of clinical benefit. The deal between Hansoh Pharma and Merck, however, introduces a potential competitor to Viking's product, which could explain the market's reaction to the news.

Eliza Sun, Executive Director of the Board at Hansoh Pharma, expressed confidence in the partnership, highlighting Merck's established presence in cardiometabolic diseases and the potential to accelerate the development of HS-10535 globally. Merck plans to include the upfront payment as a pre-tax charge in its fourth-quarter results of 2024, which will impact both GAAP and non-GAAP earnings by $0.04 per share.

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

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Source: Investing.com