Merck to develop weight loss pill from Chinese drugmaker in up to $2 billion licensing deal

• On Wednesday, Merck announced that it had acquired the rights to an experimental weight loss pill from Hansoh Pharma in a deal worth up to $2 billion.
• According to a news release, Merck will pay Hansoh $112 million upfront for the drug's rights, with the possibility of an additional $1.9 billion in milestone payments and royalties on sales.
• Numerous other pharmaceutical companies, including Pfizer and Roche, are competing to create more accessible obesity medications that can rival the popular injections from Novo Nordisk and Eli Lilly.

Hansoh Pharma has granted Wednesday the rights to an experimental weight loss pill, worth up to $2 billion, on Wednesday.

Although the oral drug has not yet been tested on humans and Merck has not disclosed which diseases it will target first, its potential entry into the booming obesity drug market could significantly increase the pharmaceutical company's chances of capturing a share of the projected $100 billion market value by the early 2030s.

Several other drugmakers, including Johnson & Johnson and Pfizer, are competing with Novo Nordisk and Eli Lilly's blockbuster injections to develop more convenient obesity pills.

Hansoh Pharma has granted Merck an exclusive global license to develop, manufacture, and commercialize HS-10535, an experimental oral drug that targets GLP-1, a gut hormone that is also the active ingredient in popular weight loss drug Wegovy and diabetes treatment Ozempic. These drugs are known for their ability to suppress appetite and regulate blood sugar levels.

According to a news release, Merck will pay Hansoh $112 million upfront for the drug's rights, with the possibility of an additional $1.9 billion in milestone payments and royalties on sales.

Merck will record a pre-tax charge of $112 million, equivalent to 4 cents per share, in its fourth-quarter financial results.

Dean Li, president of Merck Research Laboratories, stated that the oral drug has the potential to offer additional cardiometabolic benefits beyond weight reduction.

Last year, Rob Davis, CEO of Merck, stated that the company was looking for GLP-1 treatments with additional advantages beyond weight loss.

"Weight management is a challenging task to get reimbursed, but if you can demonstrate cardiovascular and diabetes outcomes, as well as fatty liver disease benefits, there is potential for opportunity," he stated at a conference.

Eccogene's experimental oral drug, licensed last year, is now in mid-stage development involving experimental GLP-1 drugs from China.