Switzerland’s Roche (ROG.S) agreed to take over obesity drug developer Carmot Therapeutics for $2.7 billion, joining a list of global contestants seeking to challenge the dominant makers of weight-loss drugs, Novo Nordisk (NVO.OL) and Eli Lilly & Co (LLY.N).
The deal, expected to close in the first quarter of 2024, includes a $2.7 billion upfront purchase price and payments of up to $400 million, depending on the achievement of certain milestones. Berkeley, California-based Carmot’s R&D portfolio comprises clinical-stage gut hormone drugs in pill and injection form to treat type 2 diabetes and obesity.
These drugs are called incretins, a group of compounds that regulate blood glucose levels by stimulating insulin secretion and suppressing appetite. Using its proprietary discovery platform, Carmot combines Chemotype Evolution, a pioneering drug development technology, with unique biological insights into the incretin receptor signaling to develop its robust pipeline of metabolic disease assets.
Carmot’s most promising drug candidate is a once-a-week injection called CT-388 that belongs to a class known as a dual GLP-1/GIP receptor agonist, the same class as Lilly’s Mounjaro or Zepbound. Both drugs are approved in the United States to treat type 2 diabetes, but the new treatment is designed to be used as an add-on therapy for weight loss.
Lilly’s sales of Mounjaro have been increasing, but it has struggled to keep up with demand. Last week, Lilly said its sales would have been higher if not for “intermittent supply interruptions” that have forced it to cut production, and the company is investing heavily to beef up its capacity.
Novo’s Ozempic is the world’s best-selling prescription medicine, with sales of more than $3.4 billion in the third quarter alone. Its rival, Wegovy, is expected to see sales of around $2 billion this year.
In addition to its efforts, Roche has been pursuing opportunities to expand its portfolio through acquisitions. Its new CEO, Thomas Schinecker, has set a rapid deal pace since taking over in March as he seeks to restore the Swiss giant’s drug development momentum following major late-stage trial setbacks in Alzheimer’s and cancer immunotherapy.
Carmot’s latest results show its pipeline is making progress against the formidable challenges of developing complex metabolic diseases like type 2 diabetes, a disease that is increasingly being linked to obesity and other health problems. The company says that its preclinical candidate for Prader-Willi syndrome is also making good progress. It expects to have this candidate in a phase 2 clinical study next year. The biotech plans to use proceeds from the IPO to develop its current clinical candidates, preclinical projects, and general corporate operations. In a statement, Carmot described its “potential to create significant value for patients and shareholders through its advanced obesity pipeline.” Including the latest deal, Roche has made nine deals this year. Its pipeline currently includes around 150 medicines in the clinic. That is more than three times as many as it had at the start of the year.