Biotech Values

[Mufaso]

Yes-good observations. This while NVO gained about ~$10B in market cap mostly for releasing good weight loss numbers (with sketchy tolerability data). This was remarkable considering these results were for a phase 1 drug they don't plan to start another study on till 2025.

At least LLY went all in immediately on Retatrutide and started multiple studies showing confidence in the drug. I contend that may turn out badly for LLY given the tolerability/safety questions surrounding this drug- reference our prior thread starting with #msg-173947624 and ending with #msg-173959895. BTW-Structure (GPCR) also lost ~10% of its market cap yesterday.

In light of the above and your message, I will speculate some and offer the following:

• NVO is waiting for the phase one on the SubQ form of Amycretin to report out in 2025 before deciding what to do with this drug. Their actions did not show much conviction.
  
• NVO knows the tolerability profile of Amycretin and it's not very good. That is one of the reasons they are slow playing this drug. (they said tolerability similar to other GLP1's/CagriSema). That brings into question the viability of the higher doses likely needed to bring about the 12% weight loss (relative to PBO).
  
• Assuming the oral form of Amycretin proceeds, NVO will end up using a lower "high dose" and end up showing much less weight loss in larger phase 2 studies.
  
• I’m estimating that Amycretin got 4% at 28 days from the NVO graph. This is the new bar for an Oral in this time frame.
  
• The market simply is enthralled with overall weight loss numbers while discounting tolerability issues. It is completely OK to release efficacy data without much tolerability data or rather OK to hide a lot of unflattering safety/tolerability details in the obesity space. (LLY didn't exactly make it easy to figure out Retatrutide had questions in their press releases)
  
• Stating the obvious - the market values new obesity drugs. In the past month alone LLY and NVO have both increased market cap by over $100B or around $200B total which is more than the total cap of PFE Pfizer currently standing at $150B!!!
  
• The rise in NVO and LLY with a decline in VKTX shows the market believes that their manufacturing prowess makes it very hard for a new entrant to be competitive. I could make several points here but bottom line is - as long as NVO/LLY have reasonably good efficacy safety in next gen drugs, the market believes this duopoly will continue.
  
• The market once again has proven that “The efficient-market hypothesis may be the foremost piece of B.S. ever promulgated in any area of human knowledge!”

What I care about is what this all means to the VKTX stock price. For the upcoming data release on the oral form of VK2735 it means that the bar is raised for efficacy and the market may not care much about good tolerability. IMO -The probability of a significant share price decline for VKTX has increased significantly as the market would look at less than 4% weight loss as a failure almost irrespective of Viking releasing good, detailed tolerability info.

I don’t think Large Pharma will be as easily fooled as the market. If anything, it has been again noted how an obesity drug can move your market cap. Every major pharma out there remains jealous of the LLY /NVO market cap. I believe the value of VKTX as a buyout just went up solely on the basis of VK2735 prior results and will go up even further if the Oral numbers are good. I still think an acquisition could happen anytime after the Oral results are released with the most likely time being after the Nash fibrosis results are released for VK2809. My buyout thesis remains for an 11 figure number that is significant or a very favorable partnership deal that takes the market cap to significant 11 figures although the short term could be negative (and decidedly so.)