Novo Nordisk signs deals worth up to $1bn with US biotechs in race for obesity drugs

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Novo Nordisk has signed deals worth up to $1bn with US biotech start-ups developing treatments for obesity and other cardiometabolic diseases, as the Wegovy manufacturer seeks to stay ahead in a major new market.

The Danish drugmaker is investing in two biotech companies founded by Flagship Pioneering, the Massachusetts-based life sciences incubator that founded Covid-19 vaccine manufacturer Moderna.

Each of the two will receive up to $532mn upfront and if certain milestones are hit. Novo Nordisk will also pay royalties on developed products and have the right to advance potential treatments through clinical trials.

The popularity of Novo Nordisk’s diabetes treatment Ozempic and weight-loss drug Wegovy has made it Europe’s most valuable company and placed it at the forefront of a new market. Barclays forecasts that sales of Wegovy will reach $7.3bn this year, while Ozempic sales are expected to be worth $16.5bn in 2024.

The deals come as investor interest in weight-loss drugs grows and pharma groups seek new treatments.

Novo Nordisk’s competitors want to win a share of the market for diabetes and weight-loss drugs, which is forecast by Canadian investment bank BMO to grow to as much as $130bn to $140bn in annual sales.

Both Novo Nordisk and the world’s largest drugmaker Eli Lilly committed to spend up to $3.5bn on companies developing obesity medication in 2023, according to figures from data provider Dealogic.

Last month, Swiss pharmaceutical company Roche agreed an up to $3.1bn takeover of obesity drug developer Carmot Therapeutics.

Under the latest deals, Novo Nordisk will reimburse research and development costs for Omega Therapeutics, a developer of messenger RNA treatments, which is trying to develop weight-loss drugs that work by altering genetic code to increase metabolic activity in a targeted way, rather than by restricting the…