Obe­si­ty drug de­vel­op­ment—still room to grow

No­vo Nordisk’s We­govy (semaglu­tide) and Eli Lil­ly’s Zep­bound (tirzepatide) quick­ly reached block­buster sta­tus with­in their first year on the mar­ket, with con­sen­sus fore­casts in­di­cat­ing USD46bn in com­bined sales by 2031, and USD8.1bn and USD4.9bn, re­spec­tive­ly, in 2024.

The adop­tion of Glucagon Like Pep­tide (GLP-1) ag­o­nist drugs in the US has cat­a­pult­ed them in­to pub­lic aware­ness, spark­ing spec­u­la­tion about their po­ten­tial to re­shape na­tion­al weight trends and eat­ing habits.

Giv­en the com­mer­cial suc­cess of ap­proved GLP-1s, there has been a clear uptick in strate­gic and in­vestor in­ter­est in the space. While there are sev­er­al tar­gets of in­ter­est in the fields of on­col­o­gy and au­toim­mu­ni­ty, there are few con­sen­sus mech­a­nisms of in­ter­est out­side of first- and sec­ond-gen­er­a­tion ap­proach­es such as in­cretins and mus­cle-spar­ing agents.

Back­ground

We­govy (semaglu­tide) and Eli Lil­ly’s Zep­bound (tirzepatide) are GLP-1 ag­o­nists that stim­u­late the pro­duc­tion of in­sulin, which un­der­pins their es­tab­lished role in the abil­i­ty to con­trol blood sug­ar/HbA1c in type 2 di­a­betes (T2D).

While there is more to learn on how GLP-1s work in weight loss specif­i­cal­ly, the clin­i­cal re­sults – gen­er­al­ly thought to be in the range of a 15–20% loss in body weight with a cor­re­spond­ing ben­e­fit to car­dio­vas­cu­lar out­comes – are clear. Nev­er­the­less, drug spon­sors, VCs, and acad­e­mia con­tin­ue to pour cap­i­tal in­to the dis­cov­ery and de­vel­op­ment of next gen­er­a­tion med­i­cines.

Physi­cians see room for im­prove­ment

With this de­vel­op­ment land­scape as a back­drop, DNB//Back Bay con­duct­ed a pro­pri­etary sur­vey of 50 en­docri­nol­o­gists and pri­ma­ry care physi­cian spe­cial­ists treat­ing obe­si­ty pa­tients in the US (in Q4 2024) to un­der­stand their per­spec­tive on cur­rent GLP-1 use, un­met needs, and where they see the mar­ket head­ing. The physi­cians sur­veyed treat­ed a me­di­an of 325 pa­tients with obe­si­ty on an an­nu­al ba­sis.

De­spite the ef­fi­ca­cy of GLP-1 med­i­cines, pa­tient dis­con­tin­u­a­tion re­mains an im­por­tant com­mer­cial ques­tion as the GLP-1 field evolves. In our sur­vey, physi­cians re­port­ed an av­er­age of 33% of pa­tients dis­con­tin­u­ing treat­ment af­ter an av­er­age of six months on ther­a­py. Among the rea­sons for dis­con­tin­u­ing ther­a­py, cost/ac­cess and nau­sea side ef­fects were the most com­mon.

It is no­table that 54% of the physi­cians ranked lack of cov­er­age as the num­ber one rea­son for pa­tient dis­con­tin­u­a­tion, while drug avail­abil­i­ty ranked high­ly in the com­mon rea­sons for dis­con­tin­u­a­tion, with 40% of the physi­cians rank­ing it among the top three con­sid­er­a­tions. While is­sues of de­mand were out of the scope of this re­view, our da­ta sug­gests the mar­ket is poised for growth, not sole­ly based on im­proved ef­fi­ca­cy/safe­ty of med­i­cines alone.

When con­sid­er­ing both GLP-1 and non-GLP-1 as­sets in the pipeline, the physi­cians over­whelm­ing­ly de­sired med­i­cines that were more ef­fi­ca­cious with re­duced out-of-pock­et cost for pa­tients.

We note an­oth­er top-of-mind is­sue for the physi­cians: ac­cess and avail­abil­i­ty. Cost and in­sur­ance cov­er­age plays an out­sized role in guid­ing the choice of physi­cians and pa­tients be­tween GLP-1 op­tions. For some, this is an even more im­por­tant con­sid­er­a­tion than clin­i­cal ef­fi­ca­cy.

Bio­phar­ma deal ac­tiv­i­ty

Bio­phar­ma deal ac­tiv­i­ty (li­cens­ing, part­ner­ing, co-de­vel­op­ment, M&A, etc.) in the obe­si­ty space has ac­cel­er­at­ed since the ap­proval of We­govy in June 2021. To date, the largest obe­si­ty deal has been Roche’s ac­qui­si­tion of Car­mot Ther­a­peu­tics for ~USD2.7bn in De­cem­ber 2023.

While deal flow has ac­cel­er­at­ed (Jan­u­ary 2019–De­cem­ber 2024), a sub­stan­tial vol­ume is con­cen­trat­ed among a small num­ber of glob­al com­pa­nies. Of the 60 deals in the past five years, 21 (35%) have in­volved No­vo Nordisk and Eli Lil­ly. Be­tween them, the two com­pa­nies have de­ployed ~USD3bn in up­front deal pay­ments, with >USD10bn com­mit­ted in mile­stones.

From a tar­get per­spec­tive, the ma­jor­i­ty of trans­ac­tions were large­ly cen­tered on GLP-1 ag­o­nist mech­a­nisms, which ac­count for 28% of all deals. Con­sis­tent with physi­cian feed­back, this sig­nals the be­lief from phar­ma in the po­ten­tial to build up­on the clin­i­cal pro­file of the cur­rent GLP-1 as­sets. Fur­ther, deals in­volv­ing as­sets com­bin­ing GLP-1 ag­o­nism with an ad­di­tion­al tar­get mech­a­nism com­bo deals en­com­passed an ad­di­tion­al 10% of the deals with a dis­closed tar­get.

Fur­ther, there is con­sid­er­able in­ter­est in de­vel­op­ing oral op­tions to for­go the bur­den of dai­ly in­jec­tions. This de­sire is borne out in deal ac­tiv­i­ty-  for those deals for as­sets with a known route of ad­min­is­tra­tion, over half of the deals in­volve oral op­tions.

In 2023, strate­gics led in cap­i­tal de­ployed for obe­si­ty as­sets, while 2024 saw a ma­jor in­crease in ven­ture fund­ing for obe­si­ty com­pa­nies. In 2024, not on­ly did the to­tal cap­i­tal de­ployed in­crease, but the av­er­age raise in­creased dra­mat­i­cal­ly to ~USD123m (USD46m in 2023).

Sim­i­lar to strate­gic cap­i­tal de­ploy­ment, VCs have pri­mar­i­ly in­vest­ed in com­pa­nies de­vel­op­ing GLP-1s, which ac­count for ~30% of ven­ture deals and 36% of cap­i­tal in­vest­ed in obe­si­ty com­pa­nies.

Con­clu­sion

The com­mer­cial trac­tion for GLP-1 ther­a­pies has reignit­ed in­dus­try in­ter­est in obe­si­ty, with a shift from it be­ing a ne­glect­ed ‘lifestyle’ dis­ease to a prime fo­cus along­side oth­er meta­bol­ic dis­or­ders like di­a­betes. Still, the field re­mains large­ly fo­cused on GLP-1 as­sets, with much of the deal-mak­ing and in­vest­ment fo­cused on im­prov­ing this class of drug.

The clin­i­cal bur­den of obe­si­ty is mul­ti­fac­to­r­i­al, and as such, af­fect­ing weight loss should mit­i­gate mul­ti­ple as­so­ci­at­ed health com­pli­ca­tions/co­mor­bidi­ties. The field could be just be­gin­ning to scratch the sur­face of what is pos­si­ble with a re­newed and con­cert­ed ef­fort from acad­e­mia, bio­phar­ma, and clin­i­cians.

DNB//Back Bay will pub­lish a fol­low up ar­ti­cle on physi­cian de­mand in this space. Be in touch for an ad­vance copy: health­carepart­ner­ship@bblsa.com

Learn more: https://www.bblsa.com/dnbback-bay

Read the re­port:

https://www.bblsa.com/fea­tured-news-home/2024/11/12/new-health­care-an­a­lyst-re­port-cns-ther­a­peu­tic-de­vel­op­ment-breach­ing-the-blood-brain-bar­ri­er-blood-brain-bar­ri­er-8e98b

Au­thors:

Pe­ter Bak,
PhD,
Man­ag­ing Di­rec­tor,
Back Bay Life Sci­ence
Ad­vi­sors

Chris­t­ian Thienel,
Di­rec­tor,
Back Bay Life Sci­ence
Ad­vi­sors

Trent Gor­don,
Con­sul­tant,
Back Bay Life Sci­ence
Ad­vi­sors

Rune Ma­jlund Dahl,
Se­nior Re­search Eq­ui­ty An­a­lyst,
DNB Mar­kets