MERCK snagged a potential drug in the burgeoning market for obesity medications in a deal worth as much as US$2 billion.
Under the terms of the deal, the company will gain the exclusive global license to develop, manufacture and commercialise Chinese drugmaker Hansoh Pharmaceutical Group’s HS-10535, an experimental oral drug that targets the receptors for GLP-1, Merck said on Wednesday (Dec 18).
It will pay Hansoh US$112 million for rights to the drug, with the potential for an additional US$1.9 billion in milestone payments.
The news caused shares of two biotechs developing weight-loss drugs, Viking Therapeutics and Structure Therapeutics, to sink as much as 11 per cent and 13 per cent respectively in early trading in New York on Wednesday, as investors speculated that a possible deal with Merck was now off the table. Merck shares were unchanged.
GLP-1 is the same gut hormone mimicked by injectable drugs such as Ozempic and Wegovy from Novo Nordisk. Drugmakers have been racing to come up with pills that could duplicate the effects of Ozempic but would be more convenient to take.
Merck chief executive officer Rob Davis has previously indicated an interest in gaining more assets that lead to second- and third-generation approaches to treating obesity, diabetes and related diseases.
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Dean Li, president of Merck Research Laboratories, said that the drug had “potential to provide additional cardiometabolic benefits beyond weight reduction”. In the release, Merck did not specify which diseases it planned to test the drug on first.
The pill is at a preclinical stage of testing, meaning it has not yet entered human trials. Other drugmakers that have been testing potential new obesity pills include Roche Holding and Pfizer.
Under the terms of the deal, Hansoh Pharma would also receive royalties on sales, and may co-promote or solely commercialise the drug in China subject to certain conditions, the companies said. To account for the deal, Merck will take a US$112 million pre-tax charge in its fourth quarter results.
Their tie-up marks the latest high-profile deal involving GLP-1 assets from China. In November 2023, AstraZeneca paid US$185 million upfront to license Eccogene’s oral candidate, which has since progressed into Phase 2 testing. A few months later, a consortium of US investors pooled US$400 million to create a new startup, Kailera Therapeutics, based on three GLP-1 programmes from Jiangsu Hengrui Pharmaceuticals. BLOOMBERG
