Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
Japanese biotechnology behind Eli Lily’s new hit obesity pills is believed to be usable in anti-muscle wasting drugs developed to create new standards of patient care for weight loss.
Hitoshi Iikura, a senior executive at Chugai Pharmaceutical, told the Financial Times that he has “high expectations” that drugs to treat spinal muscular atrophy can be combined with Orforglipron, a daily weight loss medication or other similar treatments. Muscle loss is a common side effect of weight loss medications.
Chugai, a majority owned by Roche, originally developed Gym329 to treat degenerative muscle soaking disease SMA. Research suggests that loss of “lean mass” including muscles can account for 25-39% of the weight lost by people taking modern obesity medications. Maintaining muscle is important for your overall health, especially as you get older.
Chugai’s new drugs and especially the success at Orforglipron this year marked the highest ever, making it the 11th largest company on the Tokyo Stock Exchange due to its market capitalization.
Its inventory received a major boost in April, when Orforglipron passed an important milestone. Later study results showed weight and blood glucose reductions while being as safe as injectable treatments, such as Wegovy and Ozempic from Novo Nordisk, and Zepbound and Munjaro from Lilly. It is expected to be on the market from next year.
Iikura said the company did not undertake treatment for weight loss. He added that it is possible to focus on obesity as the scientist selected research goals that provide opportunities to develop drugs that could have broader applications.
For Gym329, “it’s been extended to treat obesity, which is a wider application than we originally expected,” he said. “We have high expectations about it now. At first, we didn’t expect a big market for obesity drugs.
Chugai is a rare thing in the pharmaceutical industry for the high level of autonomy maintained under Roche, which owns less than 60% of the company.
“The relationship with Roche is a superpower,” said Stephen Barker, an analyst at Investment Bank Jefferies, who estimates Orforglipron is worth $400 billion in annual sales at its peak.
Chugai took the “Monozukuri” approach to molecular and antibody research, Iikura said, but thanks to Roche’s involvement, there’s no need to worry about the costs of late-stage clinical trials.
The operating profit margin, which was 48% last year, is the highest in the industry.
Since its contract with Roche in 2002, the Swiss Group has the right to initially reject all chemotherapy drugs. Hemlibra, a hemophilia treatment developed by Chugai, has become Roche’s second largest seller, dispelling investor concerns about the partnership.
However, Roche declined Orforglipron after his previous experience with weight loss treatment was difficult. Apart from Novo Nordisk and Lilly, who have long experience in treating diabetes, a related metabolic disease, other industries have shown little enthusiasm until recently.
Recommended
Eli Lilly bought Orforglipron from Chugai for a $100 million plus milestone payments and ongoing royalties.
“Since 2018, the market and scientific advancements have evolved significantly, and the new generation (drugs) have established themselves as effective options for treating obesity,” Roche said in a statement. In 2023, it decided to return to weight loss drug development.
According to Kawabashi Hiroshi, who leads the R&D team, Chugai began researching Orforglipron around 2003. The aim was to improve the diabetic drugs that were currently under examination at the time, and to stabilize them for longer periods of time and achieve results.
Analysts note that the idea of combining Roche-approved Orforglipron with Gym329 is still in its early stages as they are skeptical of the risk of muscle loss due to anti-obesity drugs.
But Bernstein’s Miki Seo-gi said, “If this combination will become standard care for obese patients, it will be huge.”
