Merck Signs Diet Pill Licensing Agreement With Hansoh Pharma

Merck announced Wednesday that it has acquired the rights to an experimental weight loss pill from Chinese pharmaceutical maker Hansoh Pharma, in a deal worth up to $2 billion.

The oral drug has not yet undergone human trials, and Merck has not said which diseases it plans to test the drug on first. Still, it increases the drug company’s chances of capturing a share of the booming obesity drug market, which some analysts estimate will be worth more than $100 billion a year by the early 2030s.

Several other drug manufacturers, including Pfizer And Rockare racing to develop more convenient obesity pills that can rival Novo Nordisk’s blockbuster injections and Elie Lilly.

Under the terms of the agreement, Merck will obtain the exclusive worldwide license to develop, manufacture and market Hansoh Pharma’s HS-10535, an investigational oral drug that targets a gut hormone called GLP-1. Novo Nordisk Popular weight loss drug Wegovy and diabetes treatment Ozempic also target GLP-1 to reduce appetite and regulate blood sugar levels.

Merck will pay Hansoh $112 million upfront for rights to the drug, with the option to receive an additional $1.9 billion in milestone payments and royalties on sales, according to a press release.

Merck said a pretax charge of $112 million, or 4 cents per share, would be included in its fourth-quarter results.

In the release, Dean Li, president of Merck Research Laboratories, said the oral drug has “the potential to provide additional cardiometabolic benefits beyond weight reduction.”

Merck CEO Rob Davis said early last year that the company was researching GLP-1 treatments that offer benefits beyond weight loss.

“I think everyone recognizes that weight management is a difficult thing to achieve. But if you can show the cardiovascular results, if you can show the diabetes results, which you’re starting to see data for, if you can see the benefits of fatty liver disease “This is an area where we think there are opportunities,” he said at a conference at the time.

This is the latest transaction involving experimental GLP-1 drugs from China. AstraZeneca last year, Chinese company Eccogene’s experimental oral drug was licensed, which has since moved to an intermediate stage of development.