The deal for three experimental medicines in obesity and diabetes could push the Swiss drugmaker into competition with European rival Novo Nordisk A/S, whose drug Wegovy has fueled the Danish pharma player’s growth into the most valuable company in Europe.

Roche, which has come under pressure to improve its pipeline with new medicines, agreed to pay $2.7 billion at first for Carmot and up to $400 million in milestones, it said in a statement on Monday.

Though Carmot’s drugs are still in early stages of development, the deal could lead to a competitor to the likes of Wegovy and Eli Lilly & Co.’s Zepbound. Analysts estimate that the weight-loss market could reach $100 billion by the end of the decade.

Roche is joining a race by global pharma giants to get into that business, with Pfizer Inc. working on a weight-loss pill and AstraZeneca Plc signing a licensing deal with Chinese drug developer Eccogene for another. 

Roche rose as much as 2% in early trading in Zurich. The stock is one of the worst performers among European peers this year. 

One Pill 

Carmot’s lead experimental medicine is a weekly injection that’s ready to enter the second of three stages of clinical tests, meaning it’s still a few years away from reaching patients. But existing data “suggests a best-in-class potential to achieve and maintain weight loss with differentiated efficacy,” according to Roche.

One of the other two treatments as a pill, which drugmakers see as the next frontier for that treatment category. The assets could combine with another experimental Roche drug that preserves muscle mass. The portfolio could also have potential in other indications such as heart disease, Roche said.

Carmot had been exploring an initial public offering, people with knowledge of the matter said in September. 

Among Carmot’s financial backers is Horizons Ventures, the private investment arm of tycoon Li Ka-shing, Hong Kong’s richest person, according to the Bloomberg Billionaires Index. The firm co-led a $15 million financing round for Carmot in 2018 with health care venture capital fund the Column Group.

Roche has been seeking to shore up its pipeline as a windfall from treatments and testing equipment during the Covid-19 pandemic comes to an end. The deal follows Roche’s agreement to pay $7.1 billion to acquire Telavant Holdings Inc., a developer of a promising therapy for treating inflammatory bowel disease. 

Upon closing, Roche will obtain all of Berkeley, California-based Carmot’s clinical and pre-clinical assets. The transaction is currently expected to close in the first quarter of 2024.