Novo Nordisk and Eli Lilly are expected to rule the obesity market for a few more years without much challenge. To ensure they stay there as competition enters, the companies are spending billions in licensing and M&A deals.
Novo Nordisk and Eli Lilly are undoubtedly at the top of the weight loss market. With $1.7 billion in second-quarter sales recorded for Novo’s Wegovy and $1.2 billion for Lilly’s Zepbound, the companies are raking in profits.
The two behemoths are likely to remain in that spot until competitors begin to arrive on the market around 2026, according to a report from Pitchbook and Morning Star issued on September 9. But the next wave of drugs, coming from companies like Terns Pharmaceuticals, Structure Therapeutics, Pfizer and Amgen, look like they could beat the current offerings. All these companies could come together to battle for a market Pitchbook estimates could reach $200 billion annually by 2031.
But Lilly and Novo are not standing idly by. They’ve been scooping up companies and making deals, diversifying their bets on obesity treatments. And both pharmas are highly anticipated to make further acquisitions in the space, according to the report. Both have also taken smaller bites with licensing deals to explore new targets or next-generation GLP-1 approaches.
Obesity is a key investment focus for Novo, executives said during an investor day presentation in March.
Of the two, Novo has been the most prolific on the business development stage by far, with 37 partnerships focused on cardiometabolic diseases and obesity, according to the presentations. The company is specifically focused on finding new mechanisms of action.
For example, Novo is heavily investing in siRNA technology for a number of therapy areas, the majority of which are in diabetes and obesity. The company is also building out internal capabilities in proteins, peptides and monoclonal antibodies, while partnerships and acquisitions are adding small molecule options to its obesity pipeline.
Meanwhile, Lilly allocated $1.4 billion for business development overall, including milestones, closed acquisitions and equity investments in the first half of the year. Another $4.4 billion went to total R&D; the pharma has 11 new molecules in development for obesity, including a robust late-stage program and nine trials currently running.
“In obesity, our strategy is to comprehensively address this global public health crisis, pursuing opportunities against every rational mechanism, indication, and dosage form,” said CEO David Ricks on the company’s second quarter earnings call in early August.
Read on for more on the deals that Novo and Lilly hope will keep them at the top of the obesity world.
Lilly: Haya Therapeutics Partnership
Date: September
Value: Up to $1 billion
Asset(s): Multiple RNA targets
Most recently, Lilly put up to $1 billion on the line—although the exact financial breakdown was not disclosed—to work with Haya Therapeutics earlier this month. The Swiss biotech is using an RNA-guided genome platform to target obesity and other metabolic conditions.
Haya will conduct drug discovery to find multiple tissue-, disease- and cell-specific long non-coding RNA targets (lncRNA) to develop into therapeutics. Specifically, Lilly is looking for treatments with better efficacy and less toxicity than existing options for weight loss.
That’s, of course, the holy grail. While Wegovy and Zepbound are undeniably effective, they are associated with gastrointestinal side effects and muscle loss. The next generation of therapies will seek to imnprove on those two measures, but also on delivery.
Novo: Metaphore Partnership
Date: May
Value: $600 million
Asset(s): Two GLP-1 receptor agonists
Novo has worked with venture creation firm Flagship Pioneering since 2022 (see below), but in May, they doubled down. The Danish pharma signed a deal with one of Flagship’s portfolio companies, Metaphore Biotechnologies, to develop two next-generation GLP-1 receptor agonists.
The deal included up to $600 million in upfront, development and milestone payments. Novo plans to use Metaphore’s MIMIC platform, which can copy the interactions between molecules to develop therapeutics to activate the GLP-1 receptor and related pathways. The deal also includes “a novel machine learning approach to obesity management,” the companies said in announcing the deal.
Novo: Catalent Acquisition
Date: February
Value: $16.5 billion
Asset(s): Three fill finish sites
This list would not be complete without this outlier, Novo Holdings’ $16.5 billion acquisition of contract development and manufacturing organization Catalent. This deal does not bolster Novo’s pipeline, exactly, but will certainly support the company’s obesity-driven revenue.
Novo Nordisk’s holding company took control of three of Catalent’s manufacturing sites to bolster production of the blockbuster drugs Ozempic for diabetes and Wegovy for weight loss. Both use the same active ingredient, semaglutide.
The troubled manufacturer had revenue losses of $539 million in 2023 as demand for COVID-19 vaccines and treatments waned, plus debt of more than $5 billion. The company had also faced multiple quality control concerns.
Novo: EraCal Licensing Deal
Date: January
Value: $255 million
Asset(s): Oral small molecule program
Sometimes, you have to dig a little deeper into existing partnerships. Novo did exactly that, adding on a new mechanism of action in obesity through a $255 million licensing deal with Swiss biotech EraCal Therapeutics signed in January.
The deal granted Novo exclusive rights to EraCal’s oral small molecule program, which aims to control appetite and body weight to treat obesity. The two companies had been working together since 2022, when they entered into a collaboration to find targets for food intake regulation and other metabolic phenotypes. The partnership examined zebrafish larvae to find new targets to act against obesity.
Novo: Omega Therapeutics Licensing Deal
Date: January
Value: $532 million
Asset(s): Epigenomic controller program
Novo inked the first of two licensing options in obesity this year with Flagship in January, starting with Omega Therapeutics. The pharma opted in on a program designing an epigenomic controller designed to enhance metabolic activity, with the hope of developing a new treatment for obesity management.
The agreement also included a second opt-in for a metabolic dysfunction-associated steatohepatitis (MASH) therapy with Flagship’s Cellarity.
Flagship’s Pioneering Medicines and Novo will jointly support the programs through preclinical work and then Novo will advance them into the clinic and reimburse R&D costs.
Novo pledged $532 million upfront for each agreement in upfront, development and commercial milestone payments.
Lilly: Fauna Partnership
Date: December 2023
Value: $494 million
Asset(s): Multiple weight loss targets
Lilly looked to the animal kingdom for some new weight loss targets in a deal signed with Fauna Bio worth up to $494 million in December 2023.
The multi-year partnership will see the two work on finding new targets for weight loss drugs using Fauna’s artificial intelligence platform called Convergence. The platform analyzes genomic data from 452 animal species and tissues along with human data to find novel drug targets.
Lilly: BioAge Trial Partnership
Date: October 2023
Value: Not disclosed
Asset(s): Azelaprag
Lilly’s partnership with BioAge stands out a bit on this list. The companies agreed to work together on a clinical trial pairing the biotech’s apelin receptor APJ agonist azelaprag with Lilly’s Zepbound. The hope with thethis clinical trial is that the combo will boost the weight loss potential of Lilly’s mega-blockbuster.
These kinds of clinical trial supply agreements happen all the time, but Lilly is conducting the research through its independent clinical development organization called Chorus. The unit works with biotechs to develop assets through clinical proof of concept.
Lilly put more skin in the game by also participating in BioAge’s series D financing in February. BioAge raised $170 million with backing from RA Capital, Cormorant, SV Health, Lilly and Amgen. The biotech has since filed to go public and is seeking up to $153.3 million, according to a September 18 SEC filing.
Novo: Embark Biotech Acquisition
Date: August 2023
Value: $507 million
Asset(s): Embark Biotech, assets from Embark Laboratories
Novo did a double deal with Embark Laboratories in August 2023, fully acquiring Embark Biotech and signing a three-year research collaboration with the lab.
In Embark Biotech, Novo scored a metabolic program for up to $507 million. And for the research collaboration, Novo gained an option to acquire selected assets retained by Embark Laboratories based on Embark Biotech discoveries in obesity, type 2 diabetes and other indications.
Novo: Inversago Pharma Acquisition
Date: August 2023
Value: $1.1 billion
Asset(s): Inversago Pharma
Novo is already seeing the fruits of its $1.1 billion buyout of Inversago Pharma, a Canadian company that had been developing novel cannabinoid receptor 1 (CB1) receptor-based therapies. The August 2023 deal brought in a new modality for Novo to explore in its ever-expanding obesity pipeline.
Just last week, the company revealed the first results for one of the candidates, monlunabant, showing that the oral CB1 inverse agonist cut weight by 15 lbs after 16 weeks. The data reveal was low on detail, however, and Novo did not present the weight loss as a percentage of bodyweight, which has been common in these types of trials.
Novo also noted some “mild to moderate neuropsychiatric side effects,” such as anxiety, irritability and sleep disturbances. This class of drugs has been known to cause neuropsychiatric issues, including suicidality, so Novo said it intends to work with the dosing in future trials, after proving that monlunabant can in fact reduce weight.
Lilly: Versanis Bio Acquisition
Date: July 2023
Value: $1.925 billion
Asset(s): Versanis Bio
In July 2023, Lilly swept in and bought out Versanis, a biotech that had formed around a Novartis castoff, for $1.925 billion.
At the center of the deal is bimagrumab, a monoclonal antibody that aims to reduce fat without affecting muscle mass. Novartis developed the therapy in muscle disorders but studies failed to show improvement in patients’physical function. Researchers did, however, note that people taking the drug lost weight.
Fast-forward to the weight loss craze that is sweeping the pharmaceutical industry, and Lilly jumped on Novartis’ discard through the nearly $2 billion outlay.
Bimagrumab is being tested in the Phase IIb BELIEVE study for adults to achieve and maintain fat loss and a healthy body composition. Completion is expected in mid-2025, according to ClinicalTrials.gov.
Novo: Flagship Partnership
Date: May 2022
Value: Not disclosed
Asset(s): Multiple company partnerships
Why work with one company when you could work with 41? That’s what Novo did in signing a partnership with prolific biotech creator Flagship Pioneering in May 2022. The deal focused on cardiometabolic and rare diseases, providing Novo with access to the platforms developed by Flagship’s many companies.
Novo offered funding for initiated research programs and will have an exclusive option on any programs licensed from the deal. The goal was to kickstart three to five programs within the first three years.
The deal has since produced collaborations with Metaphore and Omega in obesity (see above), plus Cellarity in MASH.
Novo: Dicerna Acquisition
Date: December 2021
Value: $3.3 billion
Asset(s): Dicerna
Novo tapped into Dicerna Pharmaceuticals in 2019 to find new RNAi therapies, in a partnership that examined 30 liver cell targets that could yield new therapeutics in MASH, type 2 diabetes, obesity and rare diseases.
Satisfied with the work, Novo went all in, buying out the company entirely in November 2021 for about $3.3 billion.
The first target from the original collaboration, a NASH drug, entered the clinic in 2022, but Novo was also looking to the deal to expand the company’s RNAi research.
Besides obesity, Novo sees the possibility for Dicerna’s technology to find therapies for diabetes, cardiovascular disease, MASH and endocrine and bleeding disorders.
Novo: Kallyope Licensing Deal
Date: June 2018, September 2024
Value: Not disclosed
Asset(s): Ligand for obesity
This deal has a slow burn. Originally signed in June 2018, Novo and Kallyope agreed to discover novel peptides for obesity and diabetes. No financial details were released at the time, but the deal involved an upfront fee and research support. Novo gained the rights to up to six products and offered a licensing fee if any were optioned. Kallyope is exploring the gut-brain axis, with four programs underway for metabolism.
Earlier this month, we finally heard how the partnership was going. Novo exercised an option to license a ligand identified by Kallyope for obesity. Again, financial details were kept under wraps.
Novo said it believes it’s found a new mechanism for obesity in the Kallyope program. Now, the Danish pharma will take over preclinical and clinical development, manufacturing and commercialization. Kallyope has received an upfront option payment and may receive additional payments down the line in development and sales milestones and royalties.
