Roche Holding AG (OTC:RHHBY) has agreed to acquire a privately held obesity company Carmot Therapeutics, seeking to challenge the dominance of weight-loss drugs from Novo Nordisk A/S (NYSE:NVO) and Eli Lilly And Co (NYSE:LLY).

Carmot’s R&D portfolio includes clinical-stage subcutaneous and oral incretins to treat obesity in patients with and without diabetes and several preclinical programs, including:

• Injected subcutaneously once a week, CT-388, the lead asset, is a Phase-2 ready, dual GLP-1/GIP receptor agonist for obesity in patients with and without type 2 diabetes.
• CT-996, a once-daily oral, small molecule GLP-1 receptor agonist currently in Phase-1, is intended to treat obesity in patients with and without type 2 diabetes.
• CT-868, a Phase-2, once-daily subcutaneous injectable, dual GLP-1/GIP receptor agonist intended for the treatment of type 1 diabetes patients with overweight or obesity.

Incretins are gut hormones secreted after food intake and play a role in modulating blood glucose by stimulating insulin secretion and suppressing appetite. 

The incretin-based portfolio could also be expanded to other indications where incretins play a role, including cardiovascular, retinal, and neurodegenerative disease.

Under the terms of the agreement, Roche will pay Carmot’s equity holders $2.7 billion in cash. Additionally, Carmot’s equity holders are entitled to receive payments of up to $400 million depending on achieving certain milestones. 

Upon closing the transaction, Carmot’s current R&D portfolio and its employees will join the Roche Group as part of Roche’s Pharmaceuticals Division.

Roche will also have exclusive access to Carmot’s Chemotype Evolution discovery platform in metabolism to further strengthen Roche’s R&D efforts and portfolio across cardiovascular and metabolic diseases.

The transaction is currently expected to close in Q1 of 2024.

In October, Roche inked a deal to acquire Telavant Holdings Inc. for $7.1 billion, including a purchase price upfront and a near-term milestone payment of $150 million.

Price Action: RHHBY shares closed at $34.36 on Friday.