JPMorgan creates $500M fund for next obesity drug

JPMorgan Chase & Co.'s asset-management division has launched a venture fund exceeding $500 million to tap into the rising demand for innovative weight-loss therapies, according to Bloomberg. Named the 270 Life Sciences Private Capital Fund I, the fund closed earlier this month and is primarily focused on obesity treatments, as stated by Steve Squinto, the chief investment officer of the bank's life sciences team.

Squinto emphasized that the fund's top three investment priorities are exclusively centered on obesity, describing the weight-loss sector as having vast potential and indicating a pivotal moment for the pharmaceutical industry. This focus aligns with a growing enthusiasm among investors in the promise of new treatments for obesity. Last November, JPMorgan analysts predicted that the global market for GLP-1 (glucagon-like peptide-1) therapies will expand to over $100 billion by 2030. They also estimated that, by the end of this decade, around 30 million Americans, or nearly 9% of the U.S. population, would be using GLP-1 therapies, split between managing diabetes and obesity.

While the current commercial GLP-1 market is dominated by Novo Nordisk and Eli Lilly with their products Wegovy (semaglutide) and Zepbound (tirzepatide), respectively, JPMorgan anticipates substantial opportunities for new competitors to emerge. Gaurav Gupta, the managing partner of the new fund, noted that a stable duopoly is unlikely to dominate the future of obesity treatment, suggesting that there will be multiple significant winners in the industry.

Zepbound has experienced a particularly rapid market entry, generating close to $700 million in its first six months, outperforming Wegovy in terms of sales. However, Wegovy has also performed strongly in the market, indicating robust competition and consumer demand.

The 270 Life Sciences fund has already made significant investments, including leading a $100-million Series A round for Enlaza Therapeutics in April. According to Bloomberg, aside from obesity and weight loss, the fund also targets oncology and immunology as key areas of interest.

In summary, JPMorgan Chase & Co.'s new venture fund is strategically positioned to capitalize on the burgeoning market for weight-loss therapies. With obesity as its primary focus, the fund aims to seize the opportunity presented by the increasing demand for effective weight-loss treatments, while also exploring promising avenues in oncology and immunology.