Investors are wondering where and when the next big obesity drug deal will happen. Right now, Novo Nordisk and Eli Lilly have the growing obesity drug market all to themselves. But given the potential size of this opportunity, which some have pegged at more than $100 billion by 2030, other pharmaceutical companies — both large and small — want a piece of the action. AstraZeneca and Roche have recently entered the fray by making acquisitions, and analysts see more deals in the future. Some have speculated, for example, that Pfizer could hedge its bets with an acquisition after it suffered setbacks with two of its own experimental weight-loss drugs. Pfizer has another drug it is working on in this category, with data expected in the first half of next year. “While the [once-daily oral] While the drug may keep some hope alive for Pfizer’s obesity strategy, we believe it is increasingly clear that the company will need to look to external assets to market the opportunity it has presented,” its analyst wrote. Barclays’ Carter Gould said in a research note earlier this month. has said it expects oral GLP-1 drugs to account for one-third of the market. Shares of Pfizer tumbled on Wednesday as investors reacted to a disappointing outlook for the company. Its stock hit a 10-year low intraday and is down about 49% year to date, having fallen nearly 14% in December alone. Ahead of the investor meeting, views on the name were mixed, with less than half of analysts rating it a buy. Deal activity in the space is already strong In early November, AstraZeneca licensed ECC5004, an oral glucagon-like peptide 1 receptor agonist being investigated by Eccogene for use in the treatment of obesity, type 2 diabetes and other cardiometabolic diseases. And it might not happen. Executives said they are continuing to “scan the landscape and understand what might be the best fit for this growing portfolio.” Roche agreed in early December to buy Carmot Therapeutics for $2.7 billion upfront, plus potential milestone payments. Carmot is working to develop CT-388, a weekly injection that has two incretin hormones, the GLP-1 and GIP receptor agonists. In this way, it is similar to Eli Lilly’s tirzepatide, which was recently approved for the treatment of obesity under the brand name Zepbound. In addition to this lead asset, Carmot has two other early-stage compounds in this class, including an oral drug, CT-996. The potential suitors In a recent research note, Jefferies analyst Roger Song said that “the short list of high potential” next buyers[s]The GLP-1 space includes not only Pfizer, but also Amgen, Regeneron, Novartis and Novo Nordisk. “A significant number of large caps that have exposure to obesity and/or neighboring areas could be interested in boosting their presence.” Song wrote. “Based on our review of 24 large caps, we found that 13 large caps currently have exposure to either obesity/[type 2 diabetes] (7) or [cardiovascular]/liver/metabolic kidney (12).” Song also noted that Bristol-Myers Squibb , Sanofi , AbbVie , and Biogen do not have products in these diseases. Deals are already part of the equation even for top-tier Novo and Lilly . Their approach was not only to gather assets that treat diabetes and obesity, but also to add potential products that could be prescribed alongside Wegovy and Zepbound, the main GLP-1 therapies. For example, Lilly agreed to buy Versanis Bio for about $2 billion in July.The clinical-stage biotech is working on treatments to protect against muscle wasting, which can happen when patients lose weight quickly.That means other companies designing drugs for preventing lean muscle loss could also be considered in future deals, analysts said.These companies include names such as Scholar Rock and Biohaven. SRRK YTD mountain Scholar Rock year to date. Michael Yee, Song’s colleague at Jefferies, recently raised his price target on Scholar Rock by $10 to $30, or about 62% above where the stock closed on Tuesday. Yee said his appeal to the clinical-stage company is linked to the “increasing strategic value in obesity” as well as attention from large-cap pharmaceuticals. Scholar Rock has a market capitalization of approximately $1.4 billion. Take Regeneron. Jefferies’ Song called out comments its management has made about the potential of its anti-myostatin muscle-sparing technology. The company will begin a trial next year looking at its use as patients are treated for obesity. In a recent presentation to investors, the company said studies in nonhuman primates showed that the myostatin antibodies combined with semaglutide, the active ingredient in Novo’s Ozempic and Wegovy, produced greater weight loss where more fat was lost — rather than lean muscle Shares of Regeneron have outperformed this year and are up 20% year-to-date. A majority of analysts covering the stock rate it a buy, according to FactSet. Roche has also highlighted its own line of muscle-maintaining treatments when it acquired Carmot this month. The potential targets Meanwhile, there remains a desire to have drugs that are just as effective in weight loss as Wegovy and Zepbound, but in pill form. Currently the two approved drugs are given by weekly injection. A pill would be easier to manufacture and would be preferred by many patients who fear injections. It could also cost less. In addition, there is ongoing research by some companies into whether adding other gut hormones will increase the effectiveness of the drugs. Small and mid-cap companies working on drugs in the GLP-1 space include Terns, Viking, Zealand Pharma and Structure Therapeutics. Analysts expect some could be acquired if their compounds show promising results. On the same day that Pfizer announced plans to halt its obesity drug trial due to side effects, shares of startup Altimune soared on the progress it reported with its experimental obesity drug. Although the trial was small, about half of the participants saw at least 15% weight loss when they received the drug Altimmune. At some doses, a 20% weight reduction was achieved. Other benefits such as a drop in triglycerides and LDL cholesterol were also seen. ALT 3M Mountain Altimune shares in the last three months. In the wake of the news, Altimmune CEO Vipin Garg said the company needs to enter into a partnership or agreement with a larger pharmaceutical company to move into phase 3 clinical trials and work to bring the drug known as pemvidutide. Even with the stock gains that followed that comment, the company’s stock is down 62% this year, and it’s very small, with a market value of only $330 million. According to FactSet, all analysts covering the stock rate it a buy, but smaller stocks tend to be less liquid and can be a riskier bet. The average price target is $22.29, nearly 275% above where the shares closed on Tuesday. JMP Securities analyst Jonathan Wolleben said shares of Altimune undervalue its opportunity, which he puts at $5 billion in top-line sales to treat both obesity and NASH, a liver disease. The $25 price target is slightly higher than the Wall Street average. Wolleben had conversations with several general practitioners and endocrinologists to learn more about what patients are looking for. Although a 12 percent weight loss is considered “clinically meaningful,” doctors said patients are looking for drops of as much as 18 percent to 20 percent. As more drugs are approved to treat weight loss in the coming years, doctors are discovering other benefits associated with each one. That means doctors will try to match the patient with the drug that best suits their health needs, Wolleben said. For example, he said, some drugs may be better suited for a patient with obesity who also needs to control their blood sugar levels, while another treatment may be better for someone who has both obesity and fatty liver disease. . Understanding these profiles can also suggest which connections might make the most sense. “A more nuanced interpretation of these mechanistic subgroups and target applications will allow investors to find undervalued but derided candidates,” Wolleben wrote in a Dec. 4 research note. and could support multiple blockbuster drugs in each class.” — CNBC’s Michael Bloom contributed to this report. Correction: Carmot is working on developing CT-388. An earlier version misstated the name of the drug.
Abbvie Inc Altimune Inc Amgen Inc AstraZeneca PLC Biogen Inc Biohaven Ltd Biotechnology and Pharmaceuticals Bristol-Myers Squibb Co business news Carmot Therapeutics Inc drug Eli Lilly and Co headed Healthcare industry Investment strategy Novartis AG Novo Nordisk A/S obesity Pfizer Inc Regeneron Pharmaceuticals Inc Roche Holding AG Sanofi SA space Structure Therapeutics Inc Terns Pharmaceuticals Inc Viking Therapeutics Inc Zealand Pharma A/S