Novo is making a push into weight loss pills from China. The company has agreed to pay up to $2.6 billion to license an experimental, weekly weight loss pill from Hengrui Pharma. The deal is Novo’s second since its investor day last week, when its promises to boost growth with new drugs fell short.
Novo is trying to catch up to rival Eli Lilly in the obesity drug market. Last week it announced a separate deal to license a technology from Nanexa that could let patients take one weight loss injection every few months. Analysts said a weekly pill would be a significant entrant to the market.
Roche stops an obesity drug
Roche has stopped work on one of its obesity drug candidates. Clinical-trial data suggested the medicine did not hit internal targets. The company returned rights to the medicine, emugrobart, to Chugai Pharmaceutical, which Roche largely owns and originally discovered before licensing it to Roche.
Roche had previously estimated the drug had potential to reach annual peak sales of between $1.21 billion and $2.41 billion. The company is still developing two obesity injections and a pill, and sees potential for each of them to exceed $3.6 billion in peak sales.
The Novo deals
Novo’s investor day last week did not go as planned. Its promises to boost growth with new drugs fell short. The Hengrui deal is meant to address that weakness.
The Nanexa deal announced last week allows patients to take one weight loss injection every few months. Combined with the weekly pill from Hengrui, Novo now has both a long-acting injection and a weekly pill in development.
What the deals mean
Novo is chasing a crowded market. Lilly is a rival in obesity drugs, and Novo is trying to close the gap. The Hengrui pill gives Novo a weekly option, which analysts see as a significant entry.
Roche’s decision to stop emugrobart is a reminder that clinical failure happens often. Even a large company with deep pockets can’t force a drug through when the data doesn’t support it.
The numbers
- Novo pays up to $2.6 billion to license the Hengrui pill
- Novo’s second deal since its investor day last week
- Roche estimated emugrobart could reach $1.21 billion to $2.41 billion in peak sales
- Roche sees potential for its two injections and pill to each top $3.6 billion in peak sales
A cautionary tale
Novo’s investor day was a warning sign. The company promised new drugs and the results were disappointing. The Hengrui deal is a response to that pressure.
Roche’s exit from emugrobart is a cautionary tale. Companies spend billions on drugs that never make it to market. The difference is that Roche walked away early, while Novo is betting big on a pill from a Chinese company.
The two companies are responding to the same market forces. One is acquiring a Chinese partner, while the other is cutting its losses on a homegrown candidate.
Novo is betting on a weekly pill from Hengrui. Roche is betting on its remaining programs succeeding where emugrobart failed. Neither bet is guaranteed, but both are being made with full knowledge of the risks.
The Hengrui deal is a statement of intent. Novo wants to be a major player in obesity drugs, and it’s willing to pay for that position. Whether the pill works is the question everyone will be asking later.
For now, the morning is bright and breezy on the Pharmalot campus. The coffee is ready, and the postcards and telegrams are set to arrive.
Source material: “STAT+: Pharmalittle: We’re reading about Novo licensing a Chinese obesity pill, Merck pulling an antibiotic, and more,” STAT.
Get the Notebook.
The day's best stories and every fresh verdict, in plain English, in your inbox by seven. One email a day, no more.