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Roche has agreed to buy anti-obesity drug developer Carmot Therapeutics for up to $3.1bn, as the Swiss pharmaceutical group joins the industry’s charge into the fast-growing market for weight loss treatments.
The acquisition of Carmot, which is based in Berkeley, California, hands Roche a series of assets based on glucagon-like peptide 1 (GLP-1) agonists, which were developed to help control blood sugar levels in people with diabetes.
GLP-1s now underpin a weight loss drug, Wegovy, developed by pharmaceutical group Novo Nordisk. The Danish group and Eli Lilly dominate the fast-growing market for weight loss treatments that analysts have estimated could be worth as much as $140bn.
Under the terms of the deal, Roche said it would pay Carmot’s shareholders an initial $2.7bn and a further $400mn, dependent on whether the start-up achieved certain milestones.
In May, hedge fund Millennium Management and asset manager Janus Henderson were among investors who backed a $150mn fundraising by Carmot.
Roche’s chief executive Thomas Schinecker said: “Obesity is a heterogeneous disease, which contributes to many other diseases that together comprise a significant health burden worldwide. By combining Carmot’s portfolio [with ours] . . . we are aiming to improve the standard of care and positively impact patients’ lives.”
The potential size of the market for obesity treatments has left other drugmakers hurrying to catch up with Novo Nordisk and Eli Lilly, which have so far only developed drugs that can be injected. AstraZeneca and Pfizer are both pursuing treatments in pill form although the latter last week abandoned plans for one that would be taken twice a day.
Analysts have said that it will prove difficult for pills to achieve the same efficacy as injectable treatments, but Roche said it believed Carmot’s assets had “best-in-class potential to achieve and maintain weight loss with differentiated efficacy”, as well as the ability to be combined with other medicines it is developing.
Roche first tried to develop a drug using GLP-1s more than a decade ago, before ditching the attempt. The purchase of Carmot is the latest step by Schinecker, who took over as Roche chief earlier this year after previously leading the company’s diagnostics division, to replenish its drug pipeline.
The deal follows Roche’s acquisition in October of Telavant, which is developing a treatment for bowel disease, for $7.1bn. A series of disappointments in late-stage trials, notably for a drug it was developing for Alzheimer’s, has added urgency to Roche’s need to strengthen its pipeline.
Analysts at Jefferies said buying Carmot was “in line with [a] strategy to use balance sheet to rejuvenate pipeline depth” but warned that “execution [was] still required to rebuild confidence in research and development productivity.”
Roche shares were up 2 per cent on Monday, but remain down 15 per cent this year.
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