Investors are pondering when and where the next big obesity drug deal will occur. Currently, Novo Nordisk and Eli Lilly dominate the growing obesity drug market. But given the potential size of this opportunity (some companies estimate it at more than $100 billion by 2030), other pharmaceutical companies, large and small, are also looking to take action. AstraZeneca and Roche have recently entered the fray with acquisitions, and analysts expect more deals to come. For example, some have speculated that Pfizer could hedge its bets with an acquisition after experiencing setbacks with two of its experimental weight-loss drugs. Pfizer is still working on one more drug in this area, with data expected to be released in the first half of next year. “meanwhile, [once-daily oral] While there may remain some hope for Pfizer's obesity strategy, we believe it is becoming increasingly clear that the company must look to external assets to realize the market opportunity it envisions. ,” Barclays analyst Carter Gould said in a research note earlier this month. Shares of Pfizer, which said it expects its oral GLP-1 drug to take a third of the market, spooked Wednesday as investors reacted to the company's disappointing outlook. Year-to-date % has fallen nearly 14% in December alone. Ahead of the investor meeting, views on the name were mixed, with less than half of the analysts covering it rating it a buy. Trading activity in this area is already strong. In early November, AstraZeneca received approval for ECC5004, an oral glucagon-like peptide 1 receptor agonist being studied by Eccogene for use in treating obesity, type 2 diabetes and other cardiometabolic diseases. Executives said they are continuing to “review the situation and understand what is the best fit for this growing portfolio.” Roche agreed in early December for him to acquire Carmot Therapeutics for $2.7 billion upfront and potential milestone payments. Calmot is working on the development of his CT-388, a once-weekly injection containing two incretin hormones, a GLP-1 and a GIP receptor agonist. In that respect, it is similar to Eli Lilly's Tilzepatide, which was recently approved for the treatment of obesity under the brand name Zepbound. In addition to this major asset, Calmot has two of his compounds, including CT-996, an oral drug that is in the early stages of this category. “A short list of potential next buyers,” Jefferies analyst Roger Song said in a recent research note.[s]The GLP-1 field includes not only Pfizer, but also Amgen, Regeneron, Novartis, and Novo Nordisk. “A significant number of large-cap stocks exposed to obesity and adjacency may be interested in increasing their presence,” Song said, “based on a pipeline review of 24 large-cap stocks. , found that 13 large-cap companies are currently exposed to either obesity/obesity.[type 2 diabetes] (7) or [cardiovascular]/Liver/Metabolic Kidney (12). ” Song also noted that Bristol-Myers Squibb, Sanofi, AbbVie, and Biogen do not have pipeline products in these disease areas. Even for category leaders Novo and Lilly, deals are already part of the equation. Their approach was not only to increase their assets to treat diabetes and obesity, but also to add products that could potentially be prescribed alongside their main GLP-1 treatments, Wegovy and Zepbound. For example, Lilly agreed to acquire Versanis Bio for about $2 a clinical-stage biotech working on treatments to prevent muscle wasting that can occur when patients lose weight rapidly. That means other companies designing drugs to prevent lean muscle loss could also be in the spotlight in the future. Analysts say these companies include names like Scolar Rock and Biohaven. There is. Number of SRRK YTD Mountain Scholar Rock stocks from the beginning of the year to the present. Mr. Song's colleague at Jefferies, Michael Yee, recently raised his price target on Scholar Rock by $30, or about 62%, from $10. The stock price rose above Tuesday's closing price. Yee said the call for clinical-stage companies is tied to the “increasing strategic value in obesity” and the attention of large pharmaceutical companies. Scalar Rock's market capitalization is approximately $1.4 billion. Take Regeneron. Jeffries Song called out comments made by management on the potential of the company's anti-myostatin muscle preservation technology. The company plans to begin clinical trials next year to explore its use in treating obesity in patients. In a recent investor presentation, the company said that research in non-human primates showed that combining its myostatin antibody with semaglutide, the active ingredient in Novo's Ozempic and Wigovy, results in more muscle, not leaner muscle. It said it has been shown to cause fat loss and greater weight loss. Regeneron stock has outperformed this year, up 20% since the beginning of the year. According to FactSet, the majority of analysts covering the stock rate it a “buy.” When Roche acquired Calmot this month, it also highlighted its pipeline of muscle-sparing therapies. Potential targets Meanwhile, there is still a desire for a drug in pill form that is as effective for weight loss as Wegovy or Zepbound. Currently, his two approved drugs are administered by weekly injections. Tablets are easier to manufacture and may be preferred by many patients who fear injections. It may also cost less. In addition, some companies are continuing to study whether adding other intestinal hormones can make the drug more effective. Small- and mid-cap stocks working on drugs in the GLP-1 space include Terns, Viking, Zealand Pharma, and Structure Therapeutics. Analysts predict some could be acquired if their compounds show promising results. On the same day that Pfizer announced plans to halt clinical trials of its obesity drug due to side effects, startup Altimmune's stock soared after reporting progress on its experimental obesity drug. Although the trial was small, about half of the participants lost at least 15% of their weight while taking Altimmune's drug. At certain doses, 20% weight loss was achieved. Other benefits were also seen, including lower triglycerides and LDL cholesterol. ALT 3M Mountain Altimmune stock price over the past 3 months. Following the news, Altimmune CEO Bipin Garg said the company needed to work with a major pharmaceutical company to move forward into Phase 3 clinical trials and work toward launching the drug, known as pembidutide. He said there is a need to enter into partnerships or contracts. Even with the rise in stock prices following the comments, the company's stock is down 62% this year, and its market capitalization is minuscule at just $330 million. All analysts covering the stock rate it a buy, according to FactSet, but small-cap stocks tend to be illiquid and can be a riskier bet. The average price target is $22.29, representing nearly 275% above Tuesday's closing price. Jonathan Wolleven, an analyst at JMP Securities, said Altimmune's stock undervalues the opportunity, predicting peak sales of $5 billion for the treatment of obesity and NASH, a liver disease. . His $25 price target is slightly higher than Wall Street's average. Wolleven has spoken with many general practitioners and endocrinologists to learn more about what patients want. A weight loss of 12% is considered “clinically meaningful,” but doctors say patients want to lose about 18 to 20%. As more drugs are approved for weight loss treatment in the coming years, doctors are discovering other benefits associated with each drug. This means doctors try to match patients with the drug that best fits their health needs, Wolleven said. For example, some drugs may be suitable for obese patients who also need blood sugar control, while other treatments may be suitable for patients who suffer from both obesity and fatty liver disease. he said. Understanding these profiles can also suggest which alliances make the most sense. “A more nuanced interpretation of the subgroups and target applications of these mechanisms could help investors find undervalued but de-risked candidates,” Wolleven said on Dec. 4. I wrote this in my research notes. And it could potentially support multiple blockbuster drugs in each class. — CNBC's Michael Bloom contributed to this report. Correction: Calmot is working on the development of CT-388. The drug name was incorrectly listed in the previous version.
Where M&A could be heading in the obesity drug space
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