Roche expands obesity drug plans with $1.65B Zealand acquisition

Roche, a Swiss pharmaceutical giant, has made a significant investment in obesity treatment by partnering with Zealand Pharma. The deal, valued at $1.65 billion, allows Roche to license a promising experimental injection, petrelintide, which Zealand Pharma advanced into a Phase 2b trial in December. Under this agreement, Roche will pay $1.4 billion upfront, with an additional $250 million to be paid over time in anniversary installments. If all milestones are achieved, Zealand could reap up to $5.3 billion from the arrangement. The two companies will jointly market the product in the U.S. and Europe, sharing both profits and losses.

This venture grants Roche entry into the field of amylin analogs, a category of drugs it did not acquire with its previous purchase of Carmot Therapeutics. These drugs mimic the effects of amylin, a hormone that plays a critical role in appetite and blood sugar regulation. Roche's strategy includes combining petrelintide with other drugs in development, potentially reimbursing Zealand $350 million for these collaborative efforts.

The pharmaceutical industry is currently exploring various avenues for obesity treatments, driven by projections that the market could achieve annual sales of $100 billion. Amylin analogs have emerged as a focus area, as demonstrated by AbbVie's recent $350 million licensing agreement with Gubra, another Denmark-based company. Despite some concerns following Novo Nordisk's challenges with a treatment called CagriSema, which combines an amylin-targeting drug with the main ingredient of their weight-loss drug Wegovy, interest in this drug class remains strong. Although CagriSema offers potential improvements over Wegovy, it did not outperform Eli Lilly's Zepbound, which combines GLP-1 and GIP target agents.

According to William Blair analyst Andy Hsieh, combinations that include GLP-1 and GIP agents are likely the most promising for broad application, maintaining both effectiveness and tolerability. Nonetheless, drugs that stimulate amylin could bolster weight-loss outcomes when used alongside other treatments. In addition to Zealand and AbbVie, companies like Novo, Lilly, AstraZeneca, and the startup Metsera are actively researching amylin agents.

Zealand Pharma has indicated that Roche intends to develop petrelintide as both a standalone treatment and in combination with its own pharmaceuticals. This includes a fixed-dose regimen with a Carmot-developed drug, CT-388, which is a GLP-1/GIP combination. Roche will also handle the manufacturing and supply responsibilities, which is critical for the drug's commercial success. This arrangement alleviates the logistical challenges that Zealand might have faced if it were to launch the drug independently. Novo Nordisk and Lilly initially encountered difficulties meeting the soaring demand for their drugs, and Zealand's competitor, Viking, recently invested $150 million in a contract manufacturer to secure supply for its experimental treatments.

The responsibility for manufacturing now rests with Roche, a move that has been positively received. This alleviation of supply chain concerns is expected to facilitate the efficient commercialization of petrelintide, potentially accelerating its availability to address the growing global obesity epidemic.