The Hansoh deal will let Merck compete in the crowded oral GLP-1 space alongside fellow pharma giants Eli Lilly, Novo Nordisk and Roche.
Merck announced on Wednesday that it has inked a global licensing partnership with Chinese biotech Hansoh Pharma to advance a GLP-1 receptor agonist pill, jumping into an already-crowded space of oral obesity drug developers.
As per the agreement, Merck will pay $112 million upfront, while pledging up to $1.9 billion in development, regulatory and commercial milestones. Hansoh will also be eligible for royalties on net sales. The companies did not disclose when they expect to close the transaction.
The centerpiece of Wednesday’s agreement is HS-10535, an orally available small molecule analog of the GLP-1 hormone. Details regarding the candidate were sparse in Merck’s news release on Wednesday, with the pharma only revealing that HS-10535 is still in preclinical development. Hansoh will retain control over HS-10535 in China, where it can choose to co-promote or solely commercialize the product.
“We aim to build on our experience targeting incretin biology to evaluate HS-10535 and its potential to provide additional cardiometabolic benefits beyond weight reduction,” Dean Li, president of Merck Research Laboratories, said in a statement. The pre-tax charge of $112 million—corresponding to $0.04 per share—will be reflected in the pharma’s GAAP and non-GAAP results for the fourth quarter of 2024.
In a Wednesday note to investors, BMO Capital Markets analysts wrote that the partnership with Hansoh will be “likely viewed as positive by the investment community.” Still, the analysts question whether the pharma should have gone after a more mature asset.
“Although Merck is unlocking value with today’s transaction, we wonder whether this was the right deal for them, given the highly competitive nature of the space,” BMO wrote.
The Hansoh deal fits with Merck’s strategy in obesity, which according to CEO Robert Davis will center on small molecule oral drugs rather than injectable peptide treatments. Davis made the remark during the 45th Goldman Sachs Healthcare Conference in June, noting that the pharma is “very much focused on the second- and third-generation opportunities.” Merck is also looking to carve out its GLP-1 niche with therapies that have other health benefits aside from weight loss, Davis added.
This thrust will put Merck in direct competition with obesity frontrunners Eli Lilly and Novo Nordisk, which are both advancing their respective oral GLP-1 candidates. Far in the lead is Lilly with its late-stage orforglipron, which in a June 2023 Phase II readout achieved weight loss between 9.4% and 14.7% at 36 weeks. Placebo comparators, meanwhile, lost 2.3% of their body weight over the same time span. Lilly anticipates Phase III data in 2025.
Meanwhile, Novo is working on amycretin, a next-generation co-agonist of the GLP-1 and amylin receptors. In March, the Danish developer revealed Phase I data for the oral asset, highlighting a 13.1% weight loss at 12 weeks, versus 1.1% for placebo.
Fellow pharma powerhouse Roche has also jumped into the oral obesity arena with the $2.7 billion acquisition of Carmot Therapeutics in December 2023, giving it access to CT-388 and CT-868, both of which are dual agonists of the GLP-1 and GIP receptors with “best-in-class potential” for obesity, Roche said at the time.
Other promising players in the oral obesity space include Viking Therapeutics, which is advancing the GLP-1/GIP agonist VK2735, and Structure Therapeutics, which is running a md-stage study of its selective GLP-1 drug GSBR-1290.
