By Maggie Fick and Ludwig Burger
ZURICH (Reuters) -Roche has acquired rights to an obesity therapy by Denmark’s Zealand Pharma in a collaboration deal worth up to $5.3 billion, as the Swiss drugmaker seeks to boost its prospects in the booming weight-loss market.
The agreement covering Zealand’s compound petrelintide, signals renewed efforts by Roche to catch up with obesity market leaders Novo Nordisk and Eli Lilly.
Under the accord, Zealand will receive $1.65 billion upfront with the possibility of milestone payments taking the total sum to $5.3 billion, depending mainly on late-stage trials and sales development, Roche said.
Zealand shares leapt 45% after the announcement before easing, and were up 28% at 1145 GMT. Roche shares gained 5.5%.
Zealand is testing petrelintide in overweight or obese individuals without type 2 diabetes in a mid-stage study.
Petrelintide belongs to a class of drugs known as long-acting amylin analogues, which mimic a hormone called amylin that is co-secreted with insulin.
The first wave of obesity drugs was based mainly on the gut hormone GLP-1, but Novo Nordisk is banking on a dual mode of action that includes amylin for its next generation of drugs, with experimental compounds called amycretin and CagriSema.
Disappointing clinical trial read-outs from CagriSema, however, have hit Novo’s shares hard in the past three months. Zealand shares also suffered on scepticism about the amylin approach. They were down about 30% this year before Wednesday’s deal.
Amylin is believed to better preserve lean mass than GLP-1-based drugs. Drugmaker AstraZeneca has an amylin-based obesity drug in early trials.
Shares in Novo Nordisk were down 4.4%, the lowest level in two years. Jefferies analysts said in a note that they believed Zealand’s petrelintide may be better than Novo’s CagriSema.
‘NEARLY PERFECT FIT’
Zealand and Roche will jointly commercialise petrelintide in the United States and Europe. Roche will obtain exclusive commercialisation rights in the rest of the world.
Profits and losses for petrelintide, as well as a fixed-dose combination with Roche’s own experimental obesity drug CT-388, will be shared on a 50/50 basis in the U.S. and Europe, said Roche.
The transaction is expected to close in the second quarter.
Roche, which in late 2023 agreed to buy drug developer Carmot, said in September three early-stage obesity and diabetes drug candidates from that acquisition have a combined potential of more than 3 billion Swiss francs in annual sales.
“It’s a nearly perfect fit for us,” Manu Chakravarthy, Roche’s head of cardiovascular, renal and metabolism product development, told Reuters, speaking of the Zealand partnership.
The obesity market is not “one size fits all”, and Roche is seeking to build a portfolio of weight-loss drugs with different strengths to cater to various needs, including muscle preservation and treatments for people with severe obesity and many associated health problems, he added.
Zealand CEO Adam Steensberg said Roche’s development efforts had helped qualify the Swiss drugmaker for the partnership.
“They have already started making strong steps in the obesity and cardiometabolic disease area. Roche has a strong history of coming and redefining disease care,” Steensberg told Reuters.
Zealand’s stock jump suggested it could be acquired by Roche, and Zealand has been seen as a possible target, one shareholder told Reuters on condition of anonymity.
“We have always said our strategy is to grow Zealand and we were looking for a true partnership. This is what we have delivered today,” Steensberg said when asked whether his company would be acquired by Roche.
A Roche spokesperson declined to comment on the possibility: “Roche is entering into an exclusive collaboration and licensing agreement with Zealand Pharma.”
(Reporting by Maggie Fick and Ludwig Burger, Additional reporting by Louise Breusch Rasmussen, Writing by Miranda Murray and Dave Graham, Editing by Rachel More, Kate Mayberry and Keith Weir)
