GLP-1 Horse Trading: Orforglipron
Drugs in development are commonly bought and sold. Sometimes the seller regrets it years later.
Life science companies are known to be very competitive with one another, battling it out in major indications such as diabetes and oncology. Despite this hardcore competition, they frequently sell or license clinical stage drugs to each other.
Why would competitors freely trade amongst each other? Perhaps what they invented isn’t a strategic priority for them, or perhaps they have another drug in development that has greater promise. Ultimately drug developers want their efforts to come to fruition and generate revenue, whether it’s them or a competitor that ultimately brings it to market.
Chugai Pharmaceutical Co. is a Japanese drug developer that is owned 65% by Roche, the Swiss pharmaceutical company that is the sixth largest in the world. Chugai developed Orforglipron, a small molecule GLP-1 receptor agonist, which is able to be administered in a daily pill format. As of the date of writing this, the GLP-1 market is dominated by peptides, which are best administered by injection.
In 2018, Chugai sold a worldwide exclusive license of Orforglipron to Eli Lilly’s diabetes division. Eli Lilly paid $50 million upfront with high single digit / low double digit royalties (~7+% royalties). Back then, GLP-1’s were primarily utilized for type 2 diabetes management, and it was a minor class of drugs in comparison to the many medications available to type 2 diabetics. GLP-1’s were understood to help with weight loss, but not to the extent that we now understand.
As the majority owner of Chugai, Roche has the first right of refusal to Chugai’s developments. In 2018, they passed on Orforglipron, allowing it to be sold to a competitor. Roche has a significant emphasis on diabetes care, so it’s quite interesting they decided to skip on Orforglipron, even if it were just for the type 2 diabetes market.
At the time of licensing, Orforglipron was pre-Phase 1 clinical trials, so the ultimate chance of success was low without human trials for safety & effectiveness. Today we know that in completed Phase 2 trials, Orforglipron has shown effectiveness in both weight loss and improved blood sugar control. The bet has paid off so far for Eli Lilly.
Eli Lilly has multiple phase 3 trials underway for Orforglipron with a potential launch in 2026. It is anticipated to be the first oral small molecule GLP-1 to launch, which will likely bring this class of drugs to an even larger demographic at perhaps a lower price than current options. It has been predicted that Orforglipron will have $8.3 billion in annual sales by 2030.1 There’s no guarantees it’ll make it through Phase 3 trials as it is estimated that only 58% of drugs in Phase 3 trials are ultimately brought to market.2 However, I’d be willing to bet that Eli Lilly has a much higher success rate for advancing Phase 3 assets than the average.
Between 2018 and 2023, Roche along with every other big pharma woke up to the promise of the GLP-1 market. Roche acquired clinical stage biopharma company Carmot in December 2023 for $2.8 billion up front, plus up to $300 million in milestone payments, where it obtained three GLP-1 candidates:3
- CT-388 is a subcutaneous weekly administered GLP-1 / GIP and is currently in Phase 2 with a projected completion date of 5/31/2026.
- CT-996 is a once daily oral small molecule GLP-1R that is currently in phase 1.
- CT-868 is a daily subcutaneous GLP-1 / GIP for type 1 diabetics currently in phase 2.
If any of these drugs are ultimately successful, the earliest launch would be in 2029. Is CT-996 going to be more effective, safer, or more tolerable than Orforglipron and the other oral small molecule GLP-1’s in development? Will CT-388 offer any advantages to its injectable competitors?
Roche could have been a dominant player in the GLP-1 space by having the first oral small molecule GLP-1. The current GLP-1 leaders Eli Lilly and Novo Nordisk are the highest valued by market cap in the big pharma industry, and Roche could have moved up a few spots from its current position of the #6 largest. Instead, Eli Lilly will continue to build its dominance in the space.
I wonder at what point the person at Roche responsible for the decision to pass up Orforglipron realized they had made a serious error of judgment?
Disclaimer: This article is intended for informational purposes only and does not constitute medical or financial advice. It is essential to consult with a qualified healthcare professional for any health concerns or before making any decisions related to your health or treatment. While I strive to be factual at all times, I cannot guarantee the accuracy of these statements.
https://www.fiercebiotech.com/biotech/most-valuable-rd-projects-you-guessed-it-obesity
https://www.nature.com/articles/nrd.2016.136
https://www.roche.com/media/releases/med-cor-2023-12-04