Inside the deal: Roche and Zealand Pharma's $5.3 billion obesity drug gambit

CNBC

02-05-2025

COPENHAGEN, Denmark — The ballooning obesity drug market may have a new contender after Roche struck a $5.3 billion deal to develop Danish biotech Zealand Pharma's "next generation" weight loss candidate.
The deal, announced in March and set to close in the second quarter, marks the Swiss pharma's latest bid to compete with weight loss heavyweights Novo Nordisk and Eli Lilly, after building out its obesity treatment portfolio over recent years.
Zealand Pharma's petrelintide amylin analog could be the asset that sets it apart. Amylin analogs are a nascent form of weight loss treatment, which mimic a hormone co-secreted with insulin in the pancreas to increase satiety. This differs from currently prevalent GLP-1 obesity drugs such as Zepbound and Wegovy, which mimic incretin hormones produced in the gut to suppress appetite.
But while analysts saw Roche as an early contender for petrelintide, both firms insisted it was by no means a done deal.
"It was a very competitive process, with a number of parties until the end," David Kendall, chief medical officer at Zealand Pharma, told CNBC.
Early clinical data points to comparable weight reduction between amylin analogs and GLP-1s, but with potentially superior tolerability and lean muscle preservation among the former — currently key sticking points for the industry.
Zealand has dubbed petrelintide a possible "future backbone therapy" for weight management, while BofA called it a "potentially best in class amylin," targeting 15-20% phase 3 weight loss as a monotherapy.
"Roche was not the only company that saw that appeal," Manu Chakravarthy, Roche's global therapy area head and cardiovascular, renal and metabolism (CVRM) product development lead, told CNBC via video call.
"These things are never done until the pen hits the paper."
The Roche-Zealand deal will see the two companies co-develop and co-commercialize petrelintide as both a standalone treatment and as a combo-therapy with Roche's lead incretin asset CT-388. Under the terms, Zealand will receive upfront cash payments of $1.65 billion, with the potential for milestone payments taking the total to up to $5.3 billion, depending on phase 3 trials and sales development.
It was heralded at the time as a win for Zealand, with analysts citing strong deal terms for the smaller biotech. Shares of Zealand Pharma jumped 38% on day of the deal, while Roche added around 4%
"We view this as a best case scenario for Zealand," BofA Global Research wrote in a note on March 13, the day after the announcement, saying the deal ticked all of the biotech's — and its own — boxes for a partnership. The bank also described it as a "positive" for Roche, bringing amylin into its broader obesity portfolio.
Zealand's Kendall told CNBC the 50-50 co-development, co-commercialization nature of the partnership was an "essential" part of negotiations, which commenced in earnest in September.
"We pushed hard on this co-co," Kendall said. "Others could say it but when the pencil hit the paper, it didn't quite read that way. We bring the expertise in petrelintide, they bring the commercial side."
Doubts were raised over whether Zealand could achieve its target profit share after an earlier AbbVie Gubra obesity drug licensing deal saw the latter agree to receive certain royalties on global net sales. However, both Roche and Zealand insisted their terms were a two-way win.
"It's not that it was a win for Zealand. It's not skewed in their way or our way. It's a true partnership," Chakravarthy said. "When you have a true collaboration and equal skin in the game, that's where the magic happens."
Roche has long been vocal about its desire to compete in the obesity drug market, agreeing in 2023 to acquire obesity drug developer Carmot Therapeutics and thereby bringing in-house a GLP-1 incretin treatment for combination therapy.
The company was punished by investors last year after trial results for one of those experimental weight-loss pills, CT-996, was linked with temporary side effects. However, Roche has long insisted that its focus is on building a suite of weight loss therapies, with amylin analogs among its key targets.
"While we had a good profile in incretins, it was also clear that there was a heterogeneity in this," Chakravarthy said. "We asked, what can we do for people who want lower weight loss? Amylin comes on the top. Then we asked what are the companies working in this space. This assessment led us to Zealand."
After seven months of negotiations, including with other major pharma players, the two firms ultimately cited a strong scientific and cultural fit among the key reasons for the agreement.
"It came down to how do we see things scientifically. Can we have an eye-to-eye conversation about the science. It was very clear Zealand saw things exactly how I described it," Chakravarthy said, citing a desire to target currently unmet patient needs, such as customizable weight loss.
"Roche was the favorite the entire way through from a culture perspective," Christina Sonnenborg Bredal, chief people officer at Zealand Pharma, said.
The race is now on to develop the drug. Zealand last week announced the initiation of a phase 2b trial of petrelintide in people with overweight or obesity and type 2 diabetes, with results due in summer 2026. Phase 3 trials will then follow.
It comes as Novo Nordisk struggles to shake negative sentiment following a series of disappointing trial results for its own amylin analog candidate CagriSema, which combines cagrilintide with its signature semaglutide — the active ingredient in Wegovy.
Zealand's CEO Adam Steensberg told CNBC in October that it expects to bring petrelintide to market around 2030. That would be well behind Novo Nordisk's 2026 targeted timeline for regulatory approval of CagriSema. But with Roche now on board, Zealand said that timeline could come forward.
"Are we doing everything we can to accelerate?" Kendall asked. "Yes."
Competition is nevertheless continuing to heat up in the fast-growing obesity drug market. Last month, Eli Lilly said its daily obesity pill orforglipron met its goals in the first of several late-stage trials, potentially opening the door to more convenient and easier-to-manufacture oral weight loss treatment. AbbVie's Gubra deal also brings another amylin contender to the table, though its development remains behind petrelintide.
Meanwhile, analysts have noted the barriers to entry for new entrants given the high development costs associated with such drugs and the need to demonstrate additional or superior benefits.
"We don't have a lot of luxury of time to bring this forward," Chakravarthy said. "We are definitely aspiring for a shorter horizon."