Merck Secures Rights to Experimental Weight Loss Pill in $2 Billion Deal
In a move to tap into the booming obesity drug market, pharmaceutical giant Merck has acquired the rights to an experimental weight loss pill from Chinese drugmaker Hansoh Pharma in a deal worth up to $2 billion. The oral drug, HS-10535, targets a gut hormone called GLP-1, which has been shown to regulate appetite and blood sugar levels.
A Growing Market Opportunity
The obesity drug market is expected to reach over $100 billion annually by the early 2030s, according to analysts. Merck’s deal with Hansoh Pharma puts the company in a strong position to capitalize on this growing market, alongside other major drugmakers such as Pfizer and Roche.
The Science Behind the Drug
HS-10535 works by targeting GLP-1, a hormone that plays a crucial role in regulating appetite and blood sugar levels. This mechanism is similar to that of Novo Nordisk’s popular weight loss drug Wegovy and diabetes treatment Ozempic. Merck believes that the oral drug has the potential to provide additional cardiometabolic benefits beyond weight reduction.
Deal Terms and Milestones
Under the terms of the deal, Merck will pay Hansoh Pharma $112 million upfront for the rights to the drug, with the potential for an additional $1.9 billion in milestone payments and royalties on sales. Merck will also take a pretax charge of $112 million, or 4 cents per share, in its fourth-quarter results.
A Strategic Move for Merck
Merck’s CEO, Rob Davis, has previously stated that the company is seeking GLP-1 treatments with benefits beyond weight loss. This deal aligns with that strategy, as the company looks to expand its presence in the obesity drug market.
A Growing Trend in GLP-1 Drugs
This deal is the latest in a series of transactions involving experimental GLP-1 drugs from China. AstraZeneca licensed a similar drug from Chinese company Eccogene last year, which has since moved into mid-stage development. As the obesity drug market continues to grow, it’s likely that we’ll see more deals like this in the future.
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