Investors looking for more transformative business development at Novo will have to wait, but a new partnership with China’s Hengrui Pharma adds a new weekly oral option to the Danish pharma’s early pipeline.
This isn’t the deal investors were looking for. But Novo has a good feeling about China’s Hengrui Pharma, signing a deal for a weekly oral peptide for obesity and other indications that could be worth up to $2.6 billion.
“HRS-1596 remains early, and the deal is unlikely to alter near-term competitive dynamics,” BMO Capital Markets wrote on Tuesday morning. That said, “once-weekly oral dosing could provide some longer-term differentiation,” the firm added.
Novo is paying $300 million upfront to license HRS-1596, a once-weekly GLP-1R/GIPR dual agonist that is ready for Phase 1, according to the pharma’s Tuesday press release. The deal could reach $2.6 billion total for Hengrui depending on certain milestones plus royalties. Novo said the asset could be used in obesity, type 2 diabetes (T2D) and other metabolic diseases. The therapy has already been cleared in China for a Phase 1 study in weight management and T2D.
The peptide will fit in nicely with Novo’s existing portfolio, which features oral semaglutide in both injectable and oral formulations for weight loss and diabetes.
“Novo appears to be leaning in on oral peptides following the early success of their Wegovy pill launch and this asset adds another target to Novo’s broad oral portfolio—potentially combining the efficacy of a dual incretin agonism with a more convenient dosing profile,” BMO wrote.
HRS-1596 will slot into a busy pipeline behind CargiSema and cagrilintide, which Novo featured last week during a Capital Markets Day. Executives promised to reach $23 billion in revenue by 2035 through multiple blockbuster launches and business development.
While HRS-1596 will not contribute meaningfully to Novo’s bottom line anytime soon, BMO welcomed the deal: “We appreciate Novo’s continued investment in oral therapies across obesity, diabetes and other cardiometabolic diseases, particularly as convenience becomes an increasingly important point of differentiation.”
But Novo still has some convincing to do with investors, as the business update failed to wow them. And Hengrui, while helpful for the long term, isn’t the kind of earth-shattering deal that investors were hoping to see from the company. “Not the transformative deal some may have been looking for,” BMO said of the Hengrui partnership.
The Hengrui deal is but one signed by the Danish weight loss juggernaut lately. On the same day as the Capital Markets presentation, Novo bought three early-stage obesity molecules from Kallyope but did not reveal the financial details.
Hengrui has become one of the hottest tickets for biopharma, with multiple high-profile partnerships showcasing the Chinese biotech’s pipeline. In obesity, Kailera Therapeutics formed around a clutch of assets with $625 million in fundraising. The company has since jumped to the public markets in what was a record-breaking debut at the time.
Bristol Myers Squibb, Merck and GSK also have major partnerships with Hengrui.
