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Weight loss drugs in the spotlight as investors inject $400 million into new biotech startup

Published 17/05/2024, 12:10 pm
© Reuters.  Weight loss drugs in the spotlight as investors inject $400 million into new biotech startup
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Four life science investors are investing $400 million into a new biotechnology startup, "Hercules CM NewCo”, which has licensed a portfolio of weight loss medicines from Jiangsu Hengrui Pharmaceuticals.

This disclosure was posted on the Shanghai Stock Exchange on Thursday.

Hercules CM NewCo, incorporated this month, is backed by Bain Capital Life Sciences, RTW Investments, Atlas Venture and Lyra Capital. The company has licensed three drug candidates from Hengrui in exchange for $110 million in upfront and near-term payments, as well as a roughly 20% equity stake.

The company may owe Hengrui up to $200 million more if certain clinical and regulatory milestones are met, and up to $5.7 billion if the licensed drugs are approved and achieve specific cumulative sales targets.

Hercules' most advanced drug, HRS-7535, is an oral "incretin" currently in Phase 2 testing for Type 2 diabetes and obesity. Similar to Novo Nordisk (CSE:NOVOb) (NYSE:NVO)'s injectable drug Wegovy, it stimulates a gut hormone called GLP-1. A second candidate, HRS-9531, is in mid-stage studies for diabetes and obesity, targeting the hormones GLP-1 and GIP, like Eli Lilly (NYSE:LLY)'s Zepbound. Hengrui is developing this drug as both a weekly injection and a tablet. The third therapy, HRS-4729, is in preclinical development.

The disclosure does not specify who will lead Hercules or serve on its board of directors.

Capital structure

The filing reveals Hercules' ownership structure: Bain Capital invested $225 million for a 39% stake, RTW holds just over 19% with a $110 million investment, Atlas provided $50 million for nearly 9%, and Lyra contributed $15 million for around 3%.

Hercules' emergence highlights the significant investment flowing into one of the most competitive areas in pharmaceutical research. Novo Nordisk (NYSE:NVO) and Eli Lilly are leading the market, with numerous successor therapies in testing. Competitors such as Amgen (NASDAQ:AMGN), Roche, Boehringer Ingelheim, Viking Therapeutics (NASDAQ:VKTX) and Structure Therapeutics are also advancing potential rivals. Startups like Metsera, which recently raised $290 million, are joining the fray.

Hengrui was recently involved in another biotech venture backed by Atlas and Bain Capital. Aiolos Bio, which licensed an asthma drug from Hengrui, became the centerpiece of a $1 billion buyout by GSK in January.

Read more on Proactive Investors AU

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