Pfizer signs deal with YaoPharma for obesity pill

Pfizer CEO Albert Bourla speaks during a press conference with European Commission President Ursula von der Leyen after a visit to monitor the production of the Pfizer-BioNtech COVID-19 vaccine at U.S. pharmaceutical company Pfizer’s factory in Puurs, Belgium, April 23, 2021.

John Thys | Reuters

Pfizer announced Tuesday that it has entered into a licensing agreement worth up to $2.1 billion with YaoPharma to develop and commercialize its obesity pill, furthering the pharmaceutical company’s push into the weight loss space.

Pfizer will pay YaoPharma, a subsidiary of Chinese drugmaker Shanghai Fosun Pharmaceutical, an upfront payment of $150 million. YaoPharma could also receive up to $1.94 billion in milestone payments and tiered royalties if the drug is approved.

YaoPharma’s drug works by targeting the same gut hormone, GLP-1 Novo NordiskWegovy, the blockbuster weight loss injection. However, the pill is still in early stages of development, meaning it will take several years to reach patients.

The deal will help Pfizer strengthen and diversify its anti-obesity drug pipeline after the company suffered a series of setbacks in the past two years, including the decision to scrap two different pills. The drugmaker boosted its competitive outlook with its acquisition of obesity biotechnology company Metsera in a deal worth up to $10 billion last month after a fierce bidding war with Novo Nordisk.

“We look forward to contributing our expertise and resources to advance the development of this small GLP-1 molecule, which complements and strengthens our growing portfolio of novel candidates to treat obesity and related diseases,” Pfizer Chief Scientific Officer Chris Boshoff said in a statement.

Under the terms of the agreement, YaoPharma will conduct a Phase 1 trial for its drug, while Pfizer will take control of subsequent development. Pfizer also plans to conduct trials combining YaoPharma’s treatment with its own drug that targets a different gut hormone receptor called GIP and is currently in mid-stage development.

This combination is not new in this area: Eli LillyZepbound, the weight loss drug, and the diabetes drug Mounjaro use a dual approach that targets both GLP-1 and GIP.

In a note Tuesday, BMO Capital Markets analyst Evan Seigerman said limited information was available about YaoPharma’s drug, called YP05002. But Seigerman said he sees “obesity diversification as promising in the near term” for Pfizer.

He added that Pfizer’s $150 million upfront payment reflected “prudent capital preservation given the recent bidding war at Metsera.”

The opportunity to enter the booming weight loss drug market could be huge for Pfizer. Some analysts believe the weight loss drug market could be worth around $100 billion by the 2030s.

It’s unclear exactly how many people in the United States use GLP-1, particularly for obesity. However, in November, about one in eight adults said they were taking a GLP-1 drug for weight loss or to treat another chronic condition, according to a survey by health research organization KFF.