Merck, known as MSD outside of the United States and Canada, is strategically positioning itself to compete in the burgeoning weight loss market, projected by many analysts to reach $150 billion in the early 2030s. Unified around the purpose of using the power of leading-edge science to save and improve lives around the world, the company is employing a multi-pronged approach, focusing on next-generation anti-obesity medications that offer additional cardiometabolic benefits beyond simple body weight reduction. For more than 130 years, Merck has brought hope to humanity through the development of important medicines and vaccines. The company aspires to be the premier research-intensive biopharmaceutical company in the world, delivering innovative health solutions that advance the prevention and treatment of diseases in people and animals.
Expanding the Pipeline Through Strategic Partnerships
To augment and complement its robust pipeline, Merck is leveraging science-driven business development. A key element of this strategy is the acquisition of exclusive rights to develop, manufacture, and commercialize promising drug candidates from other companies.
Licensing Agreement with Hansoh Pharma for Oral GLP-1 Agonist HS-10535
In a significant move, Merck has entered into a licensing agreement with Hansoh Pharma, a leading pharmaceutical company in Greater China driven by innovation, for HS-10535, a preclinical oral small molecule GLP-1 receptor agonist. Under the agreement, Hansoh Pharma has granted Merck an exclusive global license to develop, manufacture and commercialize HS-10535. Hansoh Pharma will receive an upfront payment of $112 million and is eligible to receive up to $1.9 billion in milestone payments associated with the development, regulatory approval and commercialization of the candidate, as well as royalties on sales. The upfront payment to Hansoh Pharma is $112 million, with the potential for up to $1.9 billion in milestone payments associated with development, regulatory approval, and commercialization, plus royalties on sales. This deal provides Merck with a novel oral GLP-1 receptor agonist, potentially offering a more convenient alternative to injectable GLP-1 drugs.
Hansoh Pharma's Perspective
Ms. Eliza Sun, Executive Director of the Board, Hansoh Pharma, expressed enthusiasm about the collaboration, stating, “We are pleased to announce the in-license of our oral GLP-1 by Merck, a company with established leadership in cardiometabolic diseases.” Hansoh Pharma sees Merck’s expertise and capabilities as key to accelerating the development of this promising asset for patients worldwide. Hansoh Pharma may co-promote or solely commercialize HS-10535 in China subject to certain conditions. Hansoh Pharma is committed to the treatment of major diseases in the areas of oncology, anti-infections, CNS diseases, metabolic diseases, as well as autoimmune diseases, and is dedicated to improving human health through continuous innovation. Hansoh Pharma has been ranked among the top 100 global pharmaceutical companies and the top 3 best industrial enterprises in China in terms of pharmaceutical R&D pipeline for several years and is a national key high-tech enterprise and a national technology innovation demonstration enterprise. Hansoh Pharma was listed on the Stock Exchange of Hong Kong in June 2019 (stock code: 03692.HK).
Merck's Rationale for the Acquisition
Dr. Dean Y. Li, president of Merck Research Laboratories, emphasized the strategic importance of the deal, stating, “We continue to leverage science-driven business development to augment and complement our robust pipeline. Through this agreement, we aim to build on our experience targeting incretin biology to evaluate HS-10535 and its potential to provide additional cardiometabolic benefits beyond weight reduction.”
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Focusing on Oral GLP-1 Therapies and Additional Benefits
Merck is prioritizing the development of oral GLP-1 drugs, recognizing the potential advantages in patient convenience and adherence. During the 45th Annual Goldman Sachs Healthcare Conference, Merck CEO Robert Davis said that the pharma is focusing its R&D efforts more on small molecule oral drugs rather than injectables. The company is also focusing its R&D efforts more on small molecule oral drugs rather than injectables. Moreover, Merck is seeking to develop GLP-1-targeting candidates that target other conditions on top of eliciting weight loss.
GLP-1 Receptor Agonists: A Promising Class of Drugs
GLP-1 receptor agonists, such as semaglutide (marketed as Wegovy and Ozempic by Novo Nordisk), have gained prominence for their effectiveness in treating diabetes and promoting weight loss. These drugs mimic a hormone in the intestines that stimulates the release of insulin and reduces blood glucose after the patient has eaten a meal. GLP-1 receptor agonists such as semaglutide, which Novo Nordisk sells under the brand names Wegovy and Ozempic, have been one of healthcare’s biggest stories in recent years. While they were originally developed to treat diabetes, they have been used more and more to help obese and overweight patients lose weight. They have even been linked to multiple cardiovascular benefits if taken appropriately. The drug in question, HS-10535, is a preclinical oral small molecule GLP-1 receptor agonist. Glucagon-like peptide-1 (GLP-1), is an incretin hormone that stimulates insulin secretion and slows gastric emptying.
Efinopegdutide: A Dual GLP-1/Glucagon Receptor Agonist for MASH and NAFLD
Merck's pipeline also includes efinopegdutide, an investigational peptide therapeutic that activates both the GLP-1 and glucagon receptors. Merck exclusively licensed efinopegdutide from Hanmi Pharmaceutical in 2020 for $10 million upfront and the promise of up to $860 million in milestones. While activating both the GLP-1 and glucagon pathways is a well-known mechanism of action for its weight loss and anti-diabetic effects, Merck is instead trialing efinopegdutide primarily as a treatment for metabolic dysfunction-associated steatohepatitis (MASH). The exact mechanism of efinopegdutide for treating MASH is not yet completely understood, but it might reduce liver damage, steatosis and inflammation. In June 2023, the FDA granted the GLP-1/glucagon receptor dual agonist its Fast Track designation for MASH. In addition to MASH, Merck is also developing efinopegdutide for non-alcoholic fatty liver disease (NAFLD), for which it is running a mid-stage study testing the candidate against Novo Nordisk’s semaglutide. Results from the trial showed that efinopegdutide achieved a significantly greater reduction in liver fat content, while eliciting similar weight loss.
Competition and Market Dynamics
The weight loss market is becoming increasingly competitive, with Novo Nordisk and Eli Lilly currently holding the leading positions. Novo and Eli Lilly are the two early leaders in the obesity space-and are anticipated to control around 80% of the market-but, like Merck, several other biopharma players are vying for a spot in the GLP-1 game. Boehringer Ingelheim is advancing survodutide, which also targets the GLP-1 and glucagon receptors. The candidate is in five Phase III trials, which the pharma launched in 2023. Boston-based startup Syntis Bio debuted earlier this week to advance alternative obesity treatments that do not operate via the GLP-1 pathway. Its lead program, SYNT-101, blocks the absorption of nutrients in the duodenum and mimics the effects of gastric bypass surgery. Merck’s strategy of focusing on next-generation oral GLP-1 therapies with additional clinical benefits is meant to help it break into the lucrative obesity market, which many analysts expect to reach $150 billion in value by the early 2030s.
Investor Expectations and Market Response
Investors are closely watching Merck's moves in the obesity market, especially after the company hadn’t advanced a novel metabolic medicine since its diabetes pill Januvia, which was approved in 2006. With billions of dollars in revenue coming in from its cancer drug Keytruda, Merck has a big dealmaking war chest. The licensing deal with Hansoh Pharma, while strategically sound, initially disappointed some investors who had anticipated a larger acquisition of companies like Viking Therapeutics, Terns Pharmaceuticals, and Structure Therapeutics.
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