Viking Shares Drop After Hansoh Pharma-Merck Licensing Agreement

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. Hansoh Pharma will also receive royalties on sales and retains the option to co-promote or exclusively commercialize the product in China under specific 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. However, the Hansoh Pharma-Merck deal introduces a potential competitor to Viking's product, which could explain the market's reaction.

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

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

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