Suddenly, Eli Lilly and Co. has a new, huge potential competitor in the lucrative market for obesity drugs.
Roche AG, the health care giant based in Basel, Switzerland, announced Monday it is acquiring a California-based biotech that is developing obesity drugs for $2.7 billion.
The company, Carmot Therapeutics, has numerous drugs under development. Its lead asset is a once-a-week injection called CT-388 that is in mid-stage development for the treatment of obesity.
The Carmot drug is ready to be tested on humans in the second of three trial stages, with a possible market launch in the 2030s, Teresa Graham, the head of Roche’s pharmaceuticals division, told Reuters.
The experimental drug belongs to the class called GLP-1, which includes Indianapolis-based Lilly’s tirzepatide, which is sold under the brands Mounjaro for type 2 diabetes and Zepbound for obesity.
Also in the market is Denmark-based Novo Nordisk, which makes a GLP-1 drug called semaglutide, which is sold under the brands Ozempic for type 2 diabetes and Wegovy for obesity.
Analysts expect obesity drugs to ring up annual sales in the tens of billions of dollars a year, due to the high prevalence of overweight and obese adults in the United States. More than 40% of Americans are classified as obese, or with a body mass index of 30 or higher.
Both Lilly and Novo Nordisk have scrambled to keep up with high demand for the drugs, adding billions of dollars’ worth of manufacturing capacity.
Now the question is whether startups such as Carmot can make a splash in the market, backed by the huge manufacturing and distribution network of Roche.
“The markets are large enough for ‘me-too’ products, particularly when offered at the right price,” Zeurcher Kantonalbank analysts said in a note Monday.
The GLP-1 drugs on the market have a list price of $1,000 to $1,300 a month.
Under the terms of the agreement, Roche will pay Carmot’s shareholders $2.7 billion in cash at the closing of the transaction. They are also eligible for payments of an additional $400 million depending on the achievement of certain milestones. Privately held Carmot, founded in 2008, announced plans to go public last month.
Carmot’s other drugs in development include CT-996, a once-daily oral, small-molecule GLP-1 receptor agonist in early stage test to treat obesity in patients with and without type 2 diabetes; and CT-868, a mid-stage injectable drug intended for the treatment of type 1 diabetes patients who are overweight or obese.
Roche AG is the parent of Roche Diagnostics, a maker of instruments to help physicians and laboratories test for a wide range of patient conditions. Roche Diagnostics’ North American division, with more than 4,000 employees, is based on the northeast side of Indianapolis.