Eli Lilly & Co. is continuing to grow its reach in weight loss, acquiring obesity drug startup Versanis Bio for as much as $2 billion.
(Bloomberg) — Eli Lilly & Co. is continuing to grow its reach in weight loss, acquiring obesity drug startup Versanis Bio for as much as $2 billion.
Versanis’ experimental drug, bimagrumab, aims to help people lose weight while preserving their muscle mass. The company is studying the candidate on its own and in combination with semaglutide, the hit obesity drug from Novo Nordisk A/S. Lilly will pay as much as $1.93 billion in cash, including an upfront payment and future payments depending on certain development and sales milestones, according to a statement Friday.
The deal highlights the opportunity pharma companies see in obesity after the success of drugs such as Novo Nordisk’s Wegovy. Lilly is racing to gain approval in obesity for its diabetes drug Mounjaro and developing a promising drug, retatrutide, that delivered standout weight-loss results presented at the American Diabetes Association conference last month.
Read More: Lilly’s Experimental Weight-Loss Drug Posts Best Results Yet
Founded in 2021, Versanis licensed bimagrumab from Novartis AG. The Swiss drugmaker’s tests of the candidate as a treatment for muscle-wasting diseases weren’t encouraging enough to move forward, but it did notice the compound led to weight loss.
At that time, obesity wasn’t a priority for most big pharmaceutical companies. That changed when regulators approved Wegovy for obesity treatment, and Lilly unveiled weight-loss data for Mounjaro.
“That has spurred a tremendous amount of innovation and competition in this space and Versanis was formed just in front of that to develop a completely differentiated mechanism,” Versanis Chief Executive Officer Mark Pruzanski said in an interview Friday. “Timing is everything.”
Promise Seen
Used on its own, bimagrumab has shown promise in people with obesity and type 2 diabetes, reducing overall body weight 6.5% at 48 weeks, SVB Securities analyst David Risinger said in a note, but a high percentage of those treated experienced diarrhea and muscle spasms.
Wegovy and similar drugs known as GLP-1 receptor agonists work in the brain to suppress appetite, which leads to weight loss, but can also decrease muscle mass. Versanis’s experimental drug targets tissues directly to decrease fat and increase muscle without needing to change food intake, said Chief Scientific Officer Lloyd Klickstein.
Versanis thinks its approach could result in more durable and better quality weight loss, especially alongside GLP-1 drugs. Preliminary results from a mid-stage trial should be available next year, and the company is planning to study bimagrumab in combination with Lilly’s Mounjaro, Pruzanski said.
Lilly shares rose 3.1% at 12:32 p.m. in New York.
–With assistance from Nacha Cattan.
(Updates with Versanis commentary starting in fourth paragraph..)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.