MSD makes its obesity move with $2bn Hansoh deal

MSD has been rumoured to be considering a takeover of Viking Therapeutics in order to get a horse in the obesity therapy race, but chose instead to back a runner from China's Hansoh Pharma.

The big pharma is paying Hansoh $112 million upfront to place its bet on oral GLP-1 receptor agonist HS-1035, with another $1.9 billion in milestones on offer if the drug makes it through to the market and hits sales objectives.

Companies are developing oral GLP-1-targeting medicines for obesity in the hope of coming up with an easier-to-dose alternative to the current generation of weekly, injectable drugs led by Novo Nordisk's GLP-1 agonist Wegovy (semaglutide) and Eli Lilly's GIP/GLP-1 agonist Zepbound (tirzepatide).

News of the deal weighed on the share price of Viking, which has been viewed as a potential takeover target after reporting positive results with its oral GIP/GLP-1 agonist VK237 in a phase 2 obesity trial earlier this year.

MSD – which has been something of a laggard among big pharma groups in building an obesity presence – had been mentioned as a likely interested party for a Viking deal. Shares in the latter fell sharply after the Hansoh deal was announced, alongside other smaller companies with weight-loss candidates, including Structure Therapeutics and Terns Pharma.

In partnering with Hansoh, MSD (known as Merck & Co in the US and Canada) has opted to spend less on a preclinical-stage candidate that it can take through clinical development itself, rather than paying what could be a hefty premium for a drug that already has some clinical data behind it.

Under the agreement, the Chinese biotech has granted MSD an exclusive global license to develop, manufacture, and commercialise HS-10535, whilst retaining the option to co-promote or solely commercialise the drug in its home market.

MSD's head of R&D, Dean Li, said that the licensing deal will "build on our experience targeting incretin biology to evaluate HS-10535 and its potential to provide additional cardiometabolic benefits beyond weight reduction."

The company has a history in the incretin (gastrointestinal hormone) space with Januvia (sitagliptin), which targets DPP-4 and is a blockbuster treatment for type 2 diabetes, although it is now approaching the end of its patent life in the US and already seeing generic competition in other markets.

By choosing such an early-stage project, MSD is running well behind others in the oral GLP-1 race, including Novo Nordisk with its soon-to-be filed oral formulation of semaglutide and Lilly's orforglipron in phase 3, as well as other candidates already in clinical testing from Pfizer, Roche, Amgen, AstraZeneca, and others.

MSD has an injectable dual GLP-1/glucagon candidate in phase 2 development, efinopegdutide, but is developing that drug for liver disorder metabolic dysfunction-associated steatohepatitis (MASH).

Analysts at JP Morgan recently doubled their predictions for the incretin class to $71 billion within the next 10 years. Novo Nordisk and Lilly share the bulk of the market, while other market watchers believe the overall value can go even higher.

GlobalData, for example, has forecast that the market could reach more than $125 billion in seven key markets by 2033.