Merck-Hansoh deal for oral GLP-1 hurts obesity drug developers

Viking Therapeutics (NASDAQ:VKTX) and Structure Therapeutics (NASDAQ:GPCR) were among notable decliners on Wednesday after Merck (NYSE:MRK) partnered with Chinese biopharma Hansoh (OTCPK:HNSPF) to develop an oral GLP-1 receptor agonist for obesity and related conditions.

Other weight loss drug developers, Altimmune (ALT), MetaVia (MTVA), and Terns Pharmaceuticals (TERN), have also come under pressure after the duo announced the $2B deal centered on Hansoh’s (OTCPK:HNSPF) preclinical asset HS-10535.

Meanwhile, Novo Nordisk (NVO) and Eli Lilly (LLY), established players in the weight loss drug market, traded flat alongside other market contenders, Pfizer (PFE), Amgen (AMGN), and AstraZeneca (AZN).

However, Wall Street was unmoved, with Bernstein analyst Courtney Breen noting that HS-10535 will likely trail Lilly’s (LLY) weight-loss pill orforglipron, which is in late-stage development. “We see (Merck’s) timing as a challenge,” Reuters reported, quoting Breen.

BMO Capital Markets argued that HS-10535 lags well behind orforglipron and other oral GLP-1 drugs, including Structure’s (NASDAQ:GPCR) GSBR-1290 and Pfizer’s (PFE) danuglipron. “We think that a more advanced GLP-1 would have made Merck more competitive,” analyst Evan David Seigerman wrote, according to Bloomberg.