Merck Enters Growing Obesity Drug Market with $2 Billion Deal

In a significant move within the expanding market for obesity medications, Merck & Co. has secured a potential drug through a nearly $2 billion deal with Chinese drugmaker Hansoh Pharmaceutical Group Co. This acquisition allows Merck exclusive global rights to develop, manufacture, and commercialize the experimental oral medication HS-10535, which targets gut hormone receptors associated with weight control.

Details of the Merck-Hansoh Agreement

Under the terms of the agreement, Merck will initially pay Hansoh $112 million for the rights to HS-10535. This payment is just the beginning, as the deal includes provisions for up to $1.9 billion in milestone payments based on the drug’s future success. This substantial financial commitment reflects the growing interest in obesity therapies and the potential market opportunities that they present.

The announcement led to drastic reactions in the biotech sector. Shares of Viking Therapeutics Inc. and Structure Therapeutics Inc., both of which are developing weight-loss drugs, fell sharply by 18% and 11%, respectively. Investors appeared to speculate that Merck’s acquisition of HS-10535 could diminish the likelihood of a partnership with other developers in the same space.

The Market for GLP-1 Drugs

HS-10535 operates similarly to existing injectable drugs like Ozempic and Wegovy, produced by Novo Nordisk A/S, which use GLP-1 (glucagon-like peptide-1) to aid in weight loss by mimicking the effects of this gut hormone. As researchers and pharmaceutical companies explore oral alternatives to injectable drugs, the race to develop easier-to-use formulations has intensified. Merck’s CEO Rob Davis previously expressed interest in acquiring assets that could yield second- and third-generation treatments for obesity and diabetes.

Dean Li, president of Merck Research Laboratories, noted in a statement that HS-10535 has the potential to deliver cardiometabolic benefits in addition to weight reduction, suggesting broader applications for the drug beyond obesity management. However, Merck has not yet disclosed which specific diseases they intend to target during the drug’s initial trials.

Development Stage and Next Steps

Currently, HS-10535 is in the preclinical stage of testing, meaning it has not yet progressed to human trials. This places the drug in a competitive landscape where other pharmaceutical giants, including Roche Holding AG and Pfizer Inc., are also pursuing new oral medications for obesity. The road ahead involves navigating clinical trials, regulatory approvals, and eventual commercialization, which can be arduous and unpredictable.

Financial Impact of the Deal

Merck intends to account for the $112 million upfront payment as a pre-tax charge in their fourth-quarter earnings report. This financial move marks a major investment in a high-profile sector that has garnered attention due to increasing rates of obesity worldwide. Merck’s partnership with Hansoh Pharma also outlines that the Chinese company will receive royalties on sales, with the option of co-promoting or exclusively commercializing the drug within China, contingent upon certain conditions.

Broader Implications in the GLP-1 Landscape

This partnership is part of a larger trend involving GLP-1 products originating from China, signaling the country’s growing role in the international pharmaceutical market. Earlier this year, AstraZeneca Plc paid $185 million upfront to license an oral candidate from Eccogene, which is currently in Phase 2 testing. Meanwhile, a consortium of U.S. investors recently formed Kailera Therapeutics with a $400 million investment, focusing on multiple GLP-1 programs from Jiangsu Hengrui Pharmaceuticals Co.

In their analysis, Morgan Stanley analysts pointed out that HS-10535 had not been widely discussed among investors prior to this deal, suggesting it may not have significantly impacted Hansoh’s market valuation. They noted that the arrangement could serve as a de-risking strategy in the increasingly competitive GLP-1 landscape, as pharmaceutical companies race to establish themselves in this lucrative market.

Conclusion

Merck’s acquisition of HS-10535 positions the company strategically in a burgeoning market for obesity treatments, which could have far-reaching implications for healthcare and pharmaceutical revenues globally. As the obesity epidemic continues to grow, the development and commercialization of effective therapies will be crucial in addressing this pressing health issue.

DISCLAIMERS – THIS IS A PAID ADVERTISEMENT.

TipsForTraders.com

This is a paid advertisement, not a recommendation nor an offer to buy or sell securities. Our business model is to be financially compensated to market and promote public and private companies. By reading this email, our website / media webpage you agree to the terms of our disclaimer, which are subject to change at any time. We are not registered or licensed in any jurisdiction whatsoever to provide investing advice or anything of an advisory or consultancy nature and are therefore unqualified to give investment recommendations. Always do your own research and consult with a licensed investment professional before investing.

This communication is never to be used as the basis for making investment decisions and is for entertainment purposes only. At most, this communication should serve only as a starting point to do your own research and consult with a licensed professional regarding the companies profiled and discussed. Conduct your own research. Companies with low price per share are speculative and carry a high degree of risk, so only invest what you can afford to lose. By using our service you agree not to hold our site, its editor’s, owners, or staff liable for any damages, financial or otherwise, that may occur due to any action you may take based on the information contained within our website / media webpage.

For a full disclaimer & disclosure please click here.

This communication is a paid advertisement and is not a recommendation to buy or sell securities. IR PUB Network, and its owners, managers, employees, and assigns (collectively “the Company”) has been paid by the profiled companies or a third party to disseminate this communication. IThis compensation is a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication.

Gains mentioned in this article, in our newsletter and on our website may be based on end-of-day or intraday data. Therefore, this communication should be viewed as a commercial advertisement only. The information is collected from public sources, such as the profiled company’s website and press releases, but is not researched or verified in any way whatsoever to ensure the publicly available information is correct. Furthermore, IR PUB Network often employs independent contractor writers who may make errors when researching information and preparing these communications regarding profiled companies. Independent writers’ works are double-checked and verified before publication, and approved by the company that is featured herein, but it is certainly possible for errors or omissions to take place during editing of independent contractor writer’s communications regarding the profiled company(s).

You should assume all information in all of our communications is incorrect until you personally verify the information, and again are encouraged to never invest based on the information contained in our written communications. The information in our disclaimers is subject to change at any time without notice. We have not thoroughly investigated the background of any of the companies we profile. The third party, profiled company, or their affiliates may liquidate shares of the profiled company at or near the time you receive this communication, which has the potential to hurt share prices. Frequently companies profiled in our alerts experience a large increase in volume and share price during the course of investor awareness marketing, which often end as soon as the investor awareness marketing ceases. We do not guarantee the timeliness, accuracy, or completeness of the information on our site or in our newsletters. The information in our communications and on our website is believed to be accurate and correct, but has not been independently verified and is not guaranteed to be correct. The information is collected from public sources, such as the profiled company’s website and press releases, but is not researched or verified in any way whatsoever to ensure the publicly available information is correct.

NOT AN INVESTMENT ADVISOR. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation.

ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

INDEMNIFICATION/RELEASE OF LIABILITY. By reading this communication, you agree to the terms of this disclaimer, including, but not limited to: releasing the Company, its affiliates, assigns and successors from any and all liability, damages, and injury from the information contained in this communication. You further warrant that you are solely responsible for any financial outcome that may come from your investment decisions.

RISK OF INVESTING. Investing is inherently risky. While a potential for rewards exists, by investing, you are putting yourself at risk. You must be aware of the risks and be willing to accept them in order to invest in any type of security. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell securities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. We do not advise any reader to take any specific action. Losses can be larger than expected if the company experiences any problems with liquidity or wide spreads. Our website / media webpage are for entertainment purposes only. Never invest purely based on our featured profiles on Companies. Gains mentioned in our website / media webpage(s) may be based on end-of-day or intraday data. This publication and their owners and affiliates may hold positions in the securities mentioned in our alerts, which we may sell at any time without notice to our subscribers, which may have a negative impact on share prices. The past performance of any trading system or methodology is not necessarily indicative of future results. All trades, patterns, charts, systems, etc., discussed in this message and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author and do not necessarily reflect those of the publisher.

Blog

Merck Makes Bold Move in Obesity Drug Market with $2 Billion Acquisition of HS-10535