By Andrew Silver and Patrick Wingrove
Sept 29 (Reuters) – Novo Nordisk will pay up to $2.6 billion to Jiangsu Hengrui Pharmaceuticals for the rights to an experimental weight-loss pill, expanding its pipeline through a second GLP-1 treatment deal with a Chinese partner.
The deal helps Novo shore up its competitive position against rivals such as Eli Lilly, with several patents set to expire in the next decade.
Its shares have tumbled more than 70% from record highs in the face of Lilly’s competition, Reuters reported this month.
The deal also highlights the rapid rise of China’s GLP-1 drug development industry, seeking to grab a bigger share of a booming market that analysts estimate will generate annual sales of about $100 billion globally in the next decade.
ELIGIBLE FOR TOTAL PAYMENTS OF UP TO $2.6 BILLION
The Novo deal makes Hengrui eligible for development-, regulatory- and commercial-related milestone payments of up to $2.3 billion, in addition to $300 million upfront, the Chinese drugmaker told the Hong Kong stock exchange in Tuesday’s filing.
Novo will gain development, manufacturing and commercialisation rights to HRS-1596 outside Taiwan, Macao, Hong Kong and mainland China.
Markus Manns, a portfolio manager at Union Investment, told Reuters the deal was a positive for Novo, but the drugmaker needs to make larger deals with more advanced compounds to change market perception since its shares sank after losing share to rivals.
BMO Capital Markets analyst Evan Seigerman said in a note that the transaction is unlikely to shake up near-term competition, but said the candidate could serve as an attractive longer-term pipeline option for the Danish drugmaker.
Shares of Hengrui were up about 2% in Hong Kong after the news.
Hengrui’s HRS-1596 is approved in China to initiate Phase I clinical trials for weight management and type 2 diabetes.
NEARLY 250 CHINESE GLP-1 DRUGS BEING DEVELOPED
Nearly 250 Chinese GLP-1 candidates are under development, says data provider Pharmcube, and major global drugmakers including AstraZeneca, Merck and Pfizer have struck rights deals with Chinese developers.
A trial of the jointly developed UBT251 obesity drug candidate of Novo and United Laboratories International showed a mean weight loss of up to 19.7% after 24 weeks.
Novo is preparing for a market in which pills play a much larger role, its Chief Executive Mike Doustdar told Reuters this month.
Existing products include Novo’s once-daily pill Wegovy and Lilly’s once-daily Foundayo, also in the GLP-1 class of drugs that mimic a gut hormone to curb appetite and regulate blood sugar in patients with diabetes.
POTENTIAL FOR REDUCED DOSAGE
In a statement, Novo said HRS-1596 had potential for development as an oral drug administered once a week, which would “substantially reduce dosing frequency and improve convenience compared with current offerings.”
A Novo spokesperson also told Reuters it would plan global trials with the asset, but declined to provide timelines.
Lilly did not immediately respond to a request for comment on whether it had licensed GLP-1 assets from China.
(Reporting by Andrew Silver in Shanghai; Additional reporting by Shivangi Lahiri in Bengaluru and Patrick Wingrove in London; Editing by Harikrishnan Nair, Muralikumar Anantharaman, Clarence Fernandez and Louise Heavens)
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