Dec 5, 2023 - Health

The weight-loss drug gold rush is getting larger

Illustration of a miner's pan showing three sparkling golden syringes.

Illustration: Aïda Amer/Axios

More drug companies are racing to join what's been a two-horse race to make blockbuster obesity drugs, snapping up smaller biotechs and vying for a market that could be worth tens of billions in less than a decade.

Why it matters: GLP-1 agonists like Novo Nordisk's Wegovy and Ozempic have soared in popularity despite high price tags, mixed insurance coverage and a number of unpleasant side effects.

  • The market is expected to top $100 billion by 2030 and is ripe for new entrants, as drugmakers struggle to keep up with demand. And should Medicare ultimately cover weight-loss drugs, that would take things to another order of magnitude.
  • "The markets are large enough for 'me too' products, particularly when offered at the right price," Zuercher Kantonalbank analysts said in a note, per CNBC.

Driving the news: Swiss drugmaker Roche on Monday entered the race with a $2.7 billion acquisition of the California-based biotech Carmot Therapeutics.

  • The deal gives Roche access to two obesity drug candidates, including an injectable ready for phase 2 clinical trial and a daily pill version in a phase 1 trial. Another candidate is a treatment for Type 1 diabetics who are overweight or obese.
  • Still, it could be years before either candidate hits the market if they make it through clinical trials.
  • The deal also gives Roche access to Carmot's research and development platform to help identify and optimize drug candidates.

The big picture: It's just the latest deal by a big drugmaker to add a weight-loss candidate to its development arsenal.

  • AstraZeneca last month paid $185 million to acquire global development rights for an experimental GLP-1 pill from Chinese biotech Eccogene, with up to $1.8 billion more promised if it meets clinical, regulatory and commercial milestones.
  • Eli Lilly, which last month became the second to gain approval for a weight-loss drug, in July announced a deal worth up to $1.9 billion to acquire obesity drugmaker Versanis, which is developing a drug that works differently from the appetite-suppressing GLP-1s.
  • Novo has also continued to acquire biotechs with obesity targets, including Embark Biotech in August.

Zoom in: Handfuls of biotechs are developing anti-obesity medications, including candidates that aren't GLP-1s, and could themselves become acquisition targets.

Yes, but: Drug giant Pfizer offers a cautionary tale about the challenges of developing weight-loss treatments. Last week, the company axed its second oral GLP-1 candidate in a year after patients reported serious side effects, but the company said it would still study the drug in a different formulation.

  • AstraZeneca earlier this year also suspended a phase 1 trial of an oral anti-obesity candidate, citing competition.

Between the lines: Patents are soon expiring for active ingredients of some GLP-1s, which were used as diabetes treatments for years before they became popular for weight loss. That will change the competitive dynamics.

  • Novo's diabetes drugs Victoza and Saxenda, which share an active ingredient, come off patent later this month. Mylan, Pfizer, Sandoz and Teva have all indicated plans to launch generic versions by June of next year.

The bottom line: While the race to develop anti-obesity drugs has two clear leaders, there's still a lot of room for third place.

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