AstraZeneca Plc clinched a deal to develop a drug from the pharma industry’s hottest class of medicines and touted the experimental obesity pill as potentially cheaper than current blockbuster shots.
The treatment developed by closely held Chinese biotech Eccogene is in early-stage clinical tests for diabetes. Astra agreed to spend as much as $2 billion for the medicine, almost entirely in milestone payments.
The success of weight-loss drugs has sparked something of an industry gold rush, and some analysts predict the class of treatments known as GLP-1s could become one of the biggest-ever blockbusters.
Chief Executive Officer Pascal Soriot is entering a field led by Novo Nordisk A/S and Eli Lilly & Co. as he reaps the benefits of a risky bet on cancer years ago to transform the UK drugmaker’s once meager pipeline. The timing places Astra behind the next wave of market entrants.
Pfizer Inc. expects to report mid-stage clinical trial data on its own experimental pill called danuglipron. The US company is building a new platform around the GLP area and obesity with multiple compounds.
The stock rose as much as 4.2% in London trading, erasing a recent decline.
“Buying an oral GLP-1 is a positive even in phase 1,” Jefferies analysts Peter Welford and Lucy Codrington said in a note, referring to the earliest stage of clinical trials.
Pills for obesity and diabetes are the new frontier for pharma companies working to emulate Novo’s success. The Danish drugmaker has become Europe’s most valuable company even as it struggles to meet demand for its injection. US and UK regulators just approved Lilly’s diabetes medicine for obesity as well, offering patients another option though both require injections.
“What we’re doing is working on the next generation,” Soriot said in a conference call. “There is a large proportion of patients, probably three quarters of patients, who prefer to take an oral medicine. This one offers special features because it is a product that can be given as a low dose, it has good absorption.”
Early data suggests the drug is well tolerated and shows “encouraging” body weight reduction, according to Soriot. It could also be cheaper as well as simpler to use, making it a good candidate for lower and middle-income countries, he said. However, the medicine’s profile “is unclear for now and is many years from market,” Bloomberg Intelligence’s John Murphy and Sam Fazeli wrote in a note.
Astra on Thursday also raised its profit outlook. Revenue will probably rise by a mid single-digit percentage overall this year and core earnings per share by a percentage up to the low teens, the UK drugmaker said in a statement.
The Cambridge-based company reported core earnings per share of $1.73 for the third quarter, matching analysts’ expectations, fueled by demand for its blockbuster cancer medicines.
Soriot has made cancer a priority, establishing a collaboration with Daiichi Sankyo Co. that’s already yielded one possible future blockbuster, the breast cancer drug Enhertu. Astra last month reported partial results that seemed to fall short of investors’ expectations for another medicine, called datopotamab deruxtecan or Dato-DXd.
China is becoming increasingly important for Astra, Soriot said. Eccogene will get an upfront payment of $185 million, with the remainder coming as milestones if the drug reaches certain targets. Western drugmakers have been looking to China for innovation lately, with Astra following in the footsteps of Merck & Co. and GSK Plc.
--With assistance from Dong Lyu.
