Roche joins the pharma gold rush after buying an obesity drug for $3bn

Roche rose as much as 2.2% in Zurich trading. The stock is one of the worst performers among European peers this year. Picture: Stefan Wermuth/Bloomberg

Roche agreed to pay as much as $3.1bn (€2.8bn) for Carmot Therapeutics, a developer of the new type of weight-loss treatments that’s sparked a pharma industry gold rush.

The deal for three experimental medicines in obesity and diabetes could push the Swiss drugmaker into competition with European rival Novo Nordisk, whose drugs Wegovy and Ozempic have fuelled the Danish pharma player’s growth into the most valuable company in Europe.

Roche, which has come under pressure to improve its pipeline with new medicines, agreed to pay $2.7bn at first for closely held Carmot and up to $400m in milestones, it said.

Though Carmot’s drugs are still in the early stages of development, the deal could lead to a competitor to the likes of Wegovy and Eli Lilly’s Zepbound, which are fueling the growth of a weight-loss market estimated to reach $100bn by the end of the decade.

Roche was among the first drugmakers to work on a treatment in the GLP-1 class — a category that could fuel some of the biggest-ever blockbusters — but it halted the experimental medicine’s development more than a decade ago after patients dropped out of a study due to side effects like nausea.

The field is more crowded now, with Pfizer working on a weight-loss pill and AstraZeneca signing a licensing deal with Chinese drug developer Eccogene for another.

Roche rose as much as 2.2% in Zurich trading. The stock is one of the worst performers among European peers this year.

Eli Lilly’s market value now exceeds half a trillion dollars on hopes for its drug, while Novo Nordisk is close behind. Roche’s stock has dropped more than 15% this year, giving it a value of about $228bn.

Carmot’s lead experimental medicine is a weekly injection that’s ready to enter the second of three stages of clinical tests, meaning it’s still a few years away from reaching patients. But existing data “suggests a best-in-class potential to achieve and maintain weight loss with differentiated efficacy,” according to Roche.

One of the other two treatments is a pill, which drugmakers see as the next frontier for obesity treatments because it will be easier to take. The assets could combine with another experimental Roche drug that preserves muscle mass, solving one of the fallouts of existing treatments. The trio could also have potential in other indications such as heart disease, Roche said.

Bloomberg