© Reuters. FILE PHOTO: The Eli Lilly logo is seen on one of the company’s offices in San Diego, California, US, September 17, 2020. REUTERS/Mike Blake/File Photo
By Sribarna Roy
(Reuters) – Eli Lilly and Associates said on Friday it would buy privately owned Versace for up to $1.93 billion to strengthen its position in the fast-growing market for weight loss treatments.
Shares of Eli Lilly (NYSE: NYSE) rose 3% after a deal that gives it access to an experimental obesity drug being tested alongside rival weight loss treatment Novo Nordisk (NYSE::) in a mid-stage study.
Analysts expect the weight-loss drug market to reach $100 billion within a decade, with early adopters like Eli Lilly and Novo Nordisk capturing much of the market.
Their drugs belong to a class of therapies known as incretins that are designed to mimic the action of the hormone GLP-1, which helps regulate blood sugar, slow stomach emptying, and reduce appetite.
Versanis’ main drug, bimagrumab, acts directly on fat cells without reducing appetite and without causing a loss of fat mass.
“One of the main concerns with weight loss drugs is the loss of lean mass. The goal is to lose more fat versus muscle, but with any weight loss program calorie restriction can affect both,” said Evan Segerman, analyst at BMO Capital Markets. .
“Lilly may be able to tip the scales in favor of more fat loss” by combining Incretin with a drug to encourage muscle retention or gain, he said.
Bimagrumab, which is licensed in Versanis from Swiss drugmaker Novartis, is also in early stages of trials for a potential treatment for heart failure in obesity.
Under the terms of the agreement, Versanis shareholders could receive $1.93 billion, which includes an undisclosed advance payment and additional payments upon achievement of certain development and sales milestones.