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The Japanese biotech behind Eli Lilly’s new blockbuster obesity pill believes it could be used with an anti-muscle wasting drug it has developed to create a new standard of patient care for weight loss.
Hitoshi Iikura, a senior executive at Chugai Pharmaceutical, told the Financial Times that the business had “high expectations” that its drug to treat spinal muscular atrophy could be combined with orforglipron, the once-daily weight-loss pill it has licensed to Lilly, or other similar treatments. Muscle loss is a common side effect of weight-loss drugs.
Chugai, which is majority owned by Roche, originally developed GYM329 to treat the degenerative muscle-wasting disease SMA. Studies suggest loss of “lean mass”, which includes muscle, could account for 25 to 39 per cent of the weight lost by people taking modern obesity drugs. Maintaining muscle is important for overall health, especially as people age.
Chugai’s success with new drugs and particularly with orforglipron has pushed its share price to all-time highs this year, making it the Tokyo stock exchange’s 11th largest company by market capitalisation.
Its stock had a big boost in April when orforglipron passed a significant milestone. Late-stage trial results showed it cut weight and blood sugar while being as safe as injectable treatments including Novo Nordisk’s Wegovy and Ozempic and Lilly’s Zepbound and Mounjaro. It is expected to be on the market from next year.
Iikura said that the company did not set out to treat weight loss. Its focus on obesity was possible, he added, because its scientists chose research targets that offered opportunities to develop drugs that could have wider applications.
In the case of GYM329, “it extended to treating obesity, which is a broader application than we had initially expected”, he said. “We now have high expectations for that. At first, we weren’t expecting a big market for obesity drugs . . . We didn’t anticipate it but it’s ballooning.”
Chugai is unusual in the pharmaceutical industry for the high degree of autonomy it has maintained under Roche, which owns just below 60 per cent of the company.
“Its relationship with Roche is a superpower,” said Stephen Barker, an analyst at investment bank Jefferies, which estimates orforglipron could be worth $40bn of sales a year at its peak.
Chugai took a “monozukuri” approach of precision and perfectionism to researching molecules and antibodies, Iikura said, while it does not have to worry about the costs of late-stage clinical trials thanks to the involvement of Roche.
Its operating profit margins, which were 48 per cent last year, are among the highest in the industry.
Since the 2002 deal with Roche, the Swiss group has the right of first refusal on all Chugai drugs. Hemlibra, a haemophilia treatment developed by Chugai, has become Roche’s second-biggest seller and dispelled any investor concerns about the partnership.
But Roche turned down orforglipron after difficult previous experience with a weight-loss treatment. Apart from Novo Nordisk and Lilly, which had long experience treating the related metabolic disease diabetes, the rest of the industry also showed little enthusiasm until recently.
Eli Lilly bought orforglipron from Chugai for an upfront amount of $50mn, plus milestone payments and ongoing royalties.
“Since 2018, the market and scientific advances have evolved significantly and a new generation of [drugs] have established themselves as effective options to treat obesity,” Roche said in a statement. In 2023, it decided to go back into weight-loss drug development.
Chugai started research on orforglipron around 2003, according to Hiroshi Kawabe, who led the R&D team. The aim was to improve diabetes drugs that were in trials at the time to make them longer-acting, more stable and deliverable as tablets.
Analysts note that the idea of combining orforglipron and GYM329, which is licensed to Roche, is still at an early stage, as some researchers are sceptical about the risk of muscle loss from anti-obesity drugs.
But Miki Sogi of Bernstein said that “if this combination becomes a standard of care for obese patients, then that would be huge”.
