Roche acquires Carmot Therapeutics for 3.1 billion dollars.

Last Updated: 5. Dezember 2023By

In the last few months, so-called weight-loss injections, such as Ozempic and Wegovy from Novo Nordisk or Eli Lilly’s drug Mounjaro, have caused a sensation. Originally developed to treat diabetes, these preparations suppress appetite and promote a feeling of satiety.

However, these weight-loss injections are increasingly being used by people who are not diabetic, but just want to lose weight. According to press reports, celebrities such as Kim Kardashian and Elon Musk have reportedly used weight-loss injections to maintain their slender figure. No wonder pharmaceutical companies are reaping billions in profits from their weight-loss injections.

Roche pays up to US$3.1 billion for Carmot Therapeutics
The Swiss pharmaceutical company Roche also wants to get on this train and announced yesterday (04.12.2023) that it will take over the US biotechnology company Carmot Therapeutics Inc. The US-based startup has several weight-loss preparations in its development pipeline.

According to the takeover agreement, Roche will initially pay the owners of the unlisted US startup US$2.7 billion (USD – equivalent to about 2.5 billion euros) in cash. An additional $400 million will become due when certain specified target or milestone requirements are met.

But before I go into further details of the takeover agreement, I’d like to briefly introduce you to the two pharmaceutical companies.

The companies in brief
Carmot Therapeutics, Inc., based in Berkeley, California (Greater San Francisco area), is a biotechnology company specializing in the development of life-changing therapeutics for people with metabolic diseases, including obesity and diabetes.

Carmot has developed a broad pipeline of therapeutics currently in clinical trials, including three preparations for the treatment of obesity in patients with and without diabetes.

The startup, founded in 2008, employs around 70 people. Carmot Therapeutics is owned by the founders and various venture capitalists who have supported the research and development (R&D) focused company in several rounds of financing.

The Swiss pharmaceutical company Roche Holding AG was founded in 1896 and has its headquarters in Basel. The company is one of the largest pharmaceutical companies in the world and offers medications, diagnostics and reagents.

The Swiss pharmaceutical giant employs around 100,000 people worldwide. In the 2022 fiscal year, the company generated sales of 63.3 billion Swiss francs (CHF – around 66.7 billion euros). The operating profit (EBIT) was CHF 17 billion (around 17.9 billion euros).

Lucrative market
The combating of obesity or adiposity is a very lucrative market. According to the 2023 World Obesity Atlas, by 2035 more than 4 billion people will be obese or overweight, which is equivalent to about 50% of the world population. Roche also wants to benefit from this and is therefore taking over the US biotech company Carmot Therapeutics.

However, Roche’s competitors Novo Nordisk and Eli Lilly have already launched their obesity medications, while the preparations developed by Carmot Therapeutics are still in the testing phase. But Roche’s Chief Medical Officer Levi Garraway is confident that the Carmot preparations will soon be approved:

„The clinical data for lead compound CT-388, which showed a significant weight loss in Phase 1b, are encouraging. These data point to the potential for a differentiated profile for the treatment of obesity and associated diseases,“ Garraway said in a statement.

This is how the stock exchange reacted
The investors are apparently of the opinion that the not quite cheap acquisition of Carmot Therapeutics could be a lucrative business for Roche. The Roche I-share price on the Swiss stock exchange SIX rose yesterday by 3.24% to 261.20 euros. The Roche participation certificate (GS) is also rising. It rose on Monday by 2.8% to 246.30 CHF.

This is how it will continue
Upon completion of the transaction, Roche will gain access to Carmot’s current R&D portfolio. The US company and its employees will be integrated into the pharma division of the Roche Group.

The transaction is subject to the usual closing conditions. Roche expects that the deal can be completed in the first quarter of 2024.