According to a report on December 18 from the Financial Association, Merck announced on Wednesday local time that it had signed a $2 billion agreement with HANSOH PHARMA in China to develop and sell the experimental oral weight loss drug from this Chinese Biotechnology company, which works similarly to the currently popular weight loss drugs Wegovy and Zepbound.

Under the agreement, HANSOH PHARMA grants Merck global exclusive rights to develop, produce, and commercialize HS-10535 (a clinical-stage oral small molecule GLP-1 receptor agonist).

Merck stated that HANSOH PHARMA will receive a $0.112 billion upfront payment for obtaining exclusive rights to HS-10535; additionally, HANSOH PHARMA qualifies to receive up to $1.9 billion in milestone payments based on the candidate drug's development, registration approval, and commercialization progress, and will also receive royalties based on product sales.

Under certain conditions, HANSOH PHARMA may co-promote or exclusively commercialize HS-10535 in China. Merck expects to incur $0.112 billion or $0.04 per share in pre-tax expenses, which will be included in the fourth quarter financial results under GAAP and non-GAAP accounting standards for 2024.

Compared to the currently popular injectable weight loss drugs Wegovy and Zepbound, the biggest advantage of oral weight loss drugs is their more convenient administration method, eliminating the need for injections, which can significantly improve patient adherence to treatment.

Pharmaceutical companies like Amgen, Roche, and Viking Therapeutics are all developing this therapy, trying to attract patients who are unwilling to inject. Some analysts expect that the market size for these weight loss therapies will reach $150 billion by the early 2030s.

Obesity is one of the most urgent health challenges in the world, with a wide range of comorbidities such as type 2 diabetes, cardiovascular diseases, liver diseases, and chronic kidney diseases. It is estimated that by 2035, over 4 billion people (about 50% of the world's population) will be affected by obesity or overweight.

According to reports, HANSOH PHARMA's HS-10535 is currently in the preclinical testing stage, typically performed on animals, and it may take several years before it reaches commercialization.

Merck claims that they are focusing on second- and third-generation weight loss products, such as developing oral versions of weight loss drugs, as well as those that may provide additional potential benefits.

Dean Li, President of Merck Research Laboratories, stated: "Through this agreement, the goal is to leverage our expertise in incretin biology to evaluate HS-10535 and explore whether this drug can provide additional cardiovascular metabolic benefits beyond weight loss."

Rob Davis, CEO of Merck, stated that the company is seeking GLP-1 therapeutic drugs that not only aid weight loss but also offer other benefits. He mentioned, "I believe everyone recognizes that getting reimbursement for weight loss is challenging. However, if you can demonstrate benefits in treating cardiovascular issues, diabetes, non-alcoholic fatty liver disease, etc... we see this as an opportunity area."

Meanwhile, Merck is developing its own GLP-1 candidate drug efinopegdutide, intended for the treatment of a severe liver disease known as metabolic dysfunction-associated steatotic liver disease (MASH).