AstraZeneca signs a deal for an oral obesity drug that boosts profit forecasts

AstraZeneca will enter the race to develop a weight-loss pill. It is working on a new class of drugs, which it hopes to use in developing nations to combat obesity.

The Anglo-Swedish pharmaceutical company announced on Thursday a licensing deal with China’s Eccogene to produce an oral medicine that belongs to the same drug class as Novo Nordisk’s blockbuster Wegovy, which treats diabetes and obesity in more than 1 billion people worldwide.

On Thursday, Chief Executive Pascal Soriot said that there is an “enormous demand” for obesity treatment around the globe. He stated that AstraZeneca, despite being “years behind” its competitors, was working on the “next-generation” of obesity treatments that would be taken as pills, instead of current alternatives which have to be injected.

Soriot refused to reveal when and how much the drug ECC5004 might be available. It is currently in early clinical trials. He said that the production cost for the so-called “small molecule” drug would be “much less expensive” than other drugs, making it more accessible to a “much wider pool of people”, including in lower-income countries, where AstraZeneca is historically present. He said it had an “enormous potential”.

Soriot added that it would take some time to achieve the goal. The drugmaker had a two-pronged strategy, treating obesity first and then using its other drugs together to treat comorbidities such as high bloodpressure.

AstraZeneca and Eccogene’s deal is worth $2.01bn. Eccogene received $185mn upfront as a payment for exclusive rights to develop and market the drug in the world, except China. Additional milestone payments of up to $1.83bn may be made.

The demand for Wegovy injections has driven up Novo Nordisk’s shares by nearly 50% in the past year. The competition is getting hotter, as regulators both on the east and west coasts approved Eli Lilly’s injectable diabetic medication to be used for weight loss treatments, becoming the first direct competitor to Wegovy. A widely available oral treatment, however, would be revolutionary as it would increase access to the drug worldwide.

Novo Nordisk stated this month that they expected the demand for Wegovy to continue to exceed supply, despite increasing manufacturing capacity. Wegovy is priced at about £175.80 for a pack of 2.4mg tablets. This is about half of the US list. However, health systems, insurers and the NHS negotiate discounts.

During the pandemic AstraZeneca developed a Covid-19 vaccination with Oxford University that was initially sold without profit. It delivered more than 3.5bn dosages worldwide.

Chief financial officer of AstraZeneca, Aradhana Sarin said that there were “a lot of opportunities around the world” and that obesity was also a “pandemic”.

She added, “It will require a significant amount of investment.” “We want to ensure that this is applicable to the broadest population.”

AstraZeneca has signed a new contract after developing a previous molecule for treating obesity. The company abandoned the molecule because it did not differ enough from other drugs.

AstraZeneca announced the new guidance as it raised its annual guidance following a reported 6 per cent revenue increase in the third quarter. Demand for oncology drugs and rare diseases offset declining sales of Covid-19 vaccinations.

AstraZeneca now expects total revenue, excluding Covid drug sales to rise by a low teens percentage. This is up from an earlier guided low double digit increase. The forecast for core earnings per share is a rise of up to a high-double-digit percentage. This compares with a worst-case scenario that predicted a rise in the low-double-digit range.

AstraZeneca’s third-quarter sales, excluding coronavirus products grew by 13 per cent, to $11.49bn. This was a record, and was boosted by the company’s focus on rare diseases and oncology. The sales of Covid’s vaccine and antibody treatment have flatlined at zero, compared to $716mn for the same period in 2020.

AstraZeneca shares rose 3 percent on Thursday after losing 9.2 percent in the last year.

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