Roche is stepping into the hot weight-loss drug market currently dominated by Novo Nordisk (NVO) and Eli Lilly (LLY). 

The Swiss pharmaceutical company has entered into an exclusive agreement with Denmark-based biotech firm Zealand Pharma to work together on developing and commercializing treatments for obese and overweight patients.

The deal calls for the companies to produce drugs using Zealand's experimental injectable amylin analog, petrelintide, as both a standalone and together with Roche's CT-388. Roche's treatment is also an injectable under study that contains GLP-1 receptor agonists, the same key ingredients used in Novo Nordisk’s Ozempic and Wegovy and Lilly's Mounjaro and Zepbound.

Roche to Pay Zealand Up to $5.3B

Roche will pay Zealand as much as $5.3 billion: upfront cash payments of $1.65 billion, plus up to $1.2 billion in development milestones and another $2.4 billion in sales-based milestones. Roche will receive $350 million from Zealand for any petrelintidꩵe/CT-388 fixed-dose combination product or next-generation petrelintide combination products.

Roche CEO Teresa Graham said the drugmaker hopes development of these medicines "will provide people living with obesity and related comorbidities a new treatment option."

The news sent U.S.-listed shares of Novo Nordisk 5% lower, while Eli Lilly stock 𝄹ticked higher.