On Wednesday, Merck said it has agreed to buy rights to an experimental weight loss pill from Chinese drugmaker Hansoh Pharma for up to $2 billion. Merck did not say which diseases it would test the drug on first, nor has the oral drug entered human trials. But the deal gives Merck a shot at a fast growing market for obesity drugs that analysts predict could be worth more than $100 billion a year by the early 2030s.
Merck joins other pharmaceutical companies, including Pfizer and Roche, in a race to develop better oral obesity drugs to go up against the popular injectable treatments from Novo Nordisk and Eli Lilly.
Hansoh Pharma will receive royalties from Merck for global development, manufacturing and commercialization of its experimental oral drug HS-10535, which targets a gut hormone called GLP-1. Widely used for weight loss and diabetes treatment, both Novo Nordisk’s Wegovy and Eli Lilly’s Ozempic also target GLP-1 to reduce appetite and keep blood sugar levels in check.
Hansoh is to receive $112 million upfront from Merck, plus $1.9 billion in milestones and royalties on sales, according to a news release. A pretax charge of $112 million, or 4 cents per share, will be included in Merck’s fourth quarter results, the company said.
The oral drug also has ‘potential to offer additional cardiometabolic benefits beyond weight reduction,’ said Dean Li, president of Merck Research Laboratories. Earlier, Merck CEO Rob Davis had said the company was especially interested in GLP-1 treatments that provide more than just weight loss benefits. To grow and to be reimbursed, he emphasized that benefits in cardiovascular outcomes, diabetes, and fatty liver disease would be important.
It is the latest in a string of deals involving experimental GLP1 drugs from Chinese companies. For instance, last year AstraZeneca licensed an experimental oral GLP-1 drug from Chinese company Eccogene, which has since progressed to mid stage.