Quiver Quantitative - Swiss pharmaceutical giant Roche (ROG) has marked a significant strategic shift by acquiring Carmot Therapeutics (CRMO), an obesity drug developer, for an upfront payment of $2.7 billion. This move positions Roche as a direct competitor to Novo Nordisk (NYSE:NVO) and Eli Lilly (NYSE:LLY), current leaders in the burgeoning weight-loss drug market. Carmot's most promising drug, CT-388, is in the second phase of human trials, with a potential market debut slated for the 2030s. Roche's shares responded positively to the news, reflecting investor optimism in a market projected to be worth up to $100 billion.
Roche’s acquisition aligns with the industry trend of big pharma investing heavily in obesity treatment options. CT-388, similar to Lilly's Mounjaro, targets dual GLP-1/GIP receptors, a promising approach in obesity management. Teresa Graham, head of Roche's pharmaceuticals division, expressed confidence in CT-388's potential to outperform existing products, citing opportunities for deeper and quicker weight loss, and improved tolerability. This acquisition signals Roche's intention to be more than just a low-cost alternative in the market, aiming for a leadership position in the GLP-1 class.
The deal follows a series of strategic moves by Roche, under new CEO Thomas Schinecker, to diversify its therapeutic portfolio beyond its traditional oncology stronghold. These include a recent $7.1 billion investment in an inflammatory bowel disease drug and an expansion into various other therapeutic fields. The Carmot acquisition, expected to close in the first quarter of 2024, will also involve additional milestone payments up to $400 million. This marks Roche's re-entry into the GLP-1 space, having previously sold rights to a similar experimental drug to Lilly in 2018.
Carmot Therapeutics, poised for a public offering before the acquisition, brings a diverse portfolio of gut-hormone drug candidates to Roche. These drugs, in both pill and injection forms, are designed to treat obesity in patients with and without diabetes. Stig Hansen, co-founder and CEO of Carmot, will maintain a board seat while leading Kimia Therapeutics, a spin-off focused on metabolic diseases drug discovery.
This article was originally published on Quiver Quantitative