Viking Therapeutics (VKTX), the developer of a promising experimental weight-loss drug, has announced a multi-year partnership with CordenPharma, a leading contract manufacturing firm.

The deal covers the supply of both the active pharmaceutical ingredient (API) and the finished products for Viking’s weight-loss drug, VK2735, which is being developed for the treatment of obesity.

Under the agreement, Viking will make $150 million in prepayments between 2025 and 2028, with those payments credited against future orders.

In return, CordenPharma will dedicate manufacturing capacity to produce multiple metric tons of VK2735 API annually. The company will also provide capacity to manufacture finished products for both the injectable and oral versions of the drug. This includes dedicated manufacturing lines and an annual commitment to supply 100 million autoinjectors, 100 million vials and syringe products, and more than one billion oral VK2735 tablets each year.

“CordenPharma’s established presence in commercial peptide manufacturing gives us confidence in their ability to deliver supply commensurate with what we anticipate will be significant commercial demand,” said Viking CEO Brian Lian in a press release.

Despite the news, Viking’s stock fell over 11% on Monday morning, with some investors concerned the deal could dampen the company’s acquisition prospects. But not all Wall Street analysts agreed with the take.

“Given the importance of procuring API and the associated devices and accessories, we argue it would be imprudent to delay such discussions even if Viking was theoretically in late-stage discussions with an acquirer,” wrote William Blair analyst Andy Hsieh in a note on Tuesday.

William Blair estimates the manufacturing capacity outlined in the agreement could translate to $39 billion in annual revenue.

In November, Viking presented data from two clinical trials of VK2735 at the Obesity Week conference in San Antonio, Texas. The trials tested both an injectable and a pill version of the drug.

In a small phase 1 clinical study, patients who took a daily 100 mg dose of Viking’s weight-loss pill lost an average of up to 6.8% of their body weight over 28 days when adjusted for those taking a placebo.

At the time, Hsieh noted that Viking’s results exceeded Wall Street expectations and outperformed Novo Nordisk’s experimental weight-loss pill, amycretin.

“Notably, the 100 mg dose appears to be outpacing the 100 mg dose of amycretin, which achieved about a 5% placebo-adjusted weight loss in four weeks,” Hsieh wrote.

In a separate phase 2 trial testing VK2735 as a weekly injection, patients experienced an average weight loss of 14.7% over 13 weeks. For comparison, patients taking the highest dose of Eli Lilly’s (LLY) Zepbound lost over 20% of their weight after 72 weeks in a clinical trial.

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