Lilly to buy Versanis Bio and its muscle-sparing drug bimagrumab for up to $1.93 billion

Eli Lilly and Co. said on July 14, 2023, that it will acquire privately held Versanis Bio and its lead experimental drug, bimagrumab, in a deal that could be worth up to roughly $1.93 billion ^[1][2]. The purchase is a bet that pairing an appetite-suppressing incretin medicine with a drug that acts directly on fat cells can produce weight loss that spares muscle ^[1][2].

Reuters reported the potential value at up to $1.93 billion, while Lilly put the figure at up to $1.925 billion in cash, including an upfront payment and additional payments if certain development and sales milestones are met ^[1][2]. The size of the upfront payment was not disclosed ^[1]. Reuters reported that Lilly shares rose 3% after the announcement ^[1].

Bimagrumab is a monoclonal antibody that binds activin type II A and B receptors to block activin and myostatin signaling ^[2]. It is being assessed in the BELIEVE Phase 2b study, both alone and in combination with semaglutide, in adults who are overweight or obese ^[2]. Semaglutide is Novo Nordisk's weight-loss treatment ^[1]. Versanis licensed bimagrumab from Swiss drugmaker Novartis, and the drug is also in early-stage trials as a potential treatment for heart failure in people with obesity ^[1].

Analysts expect the market for weight-loss drugs to reach up to $100 billion within a decade, with early movers such as Lilly and Novo Nordisk taking a large share ^[1]. "One of the key concerns with weight loss medications is the loss of lean mass. The goal is to lose more fat vs. muscle, but with any weight loss program calorie restriction could impact both," said BMO Capital Markets analyst Evan Seigerman, who added that Lilly "may be able to tip the scales in favor of more fat loss" by combining an incretin with a drug that encourages muscle retention or gain ^[1].

Ruth Gimeno, Lilly's group vice president for diabetes, obesity and cardiometabolic research, said the company aims to combine its knowledge of incretin biology with Versanis's work on activin biology "to harness the potential benefits of such combinations for patients" ^[2]. Versanis chairman and chief executive Mark Pruzanski said Lilly is "ideally positioned to realize the potential of bimagrumab in combination with its incretin therapies" ^[2]. Lilly said obesity is a chronic disease that affects over 100 million Americans ^[2].

Bimagrumab works through a different mechanism than incretins, which mimic the GLP-1 hormone to help regulate blood sugar, slow stomach emptying and reduce appetite ^[1]. Reuters reported that bimagrumab acts directly on fat cells without reducing appetite and without prompting lean mass loss ^[1].

Why it matters for patients

Loss of lean mass is a commonly raised concern about GLP-1 weight-loss medicines, and the hope behind this deal is that a second drug could offset it ^[1][2]. For people taking semaglutide, tirzepatide or another incretin medicine now, nothing changes immediately: bimagrumab is an investigational drug, is not approved for any use, and cannot be prescribed ^[2]. It has not been reported whether the combination produces better results than an incretin alone, and no results from the BELIEVE Phase 2b study were disclosed in the deal announcements ^[2]. It is also not yet known whether combining the two would change side effects, cost or how the drugs are taken.

Lilly will determine at closing whether to treat the purchase as a business combination or an asset acquisition under Generally Accepted Accounting Principles, which affects how the cost appears in its financial results and guidance ^[2].

What happens next

The transaction is subject to customary closing conditions, and no closing date was disclosed ^[2]. Neither company announced a date for results from the BELIEVE Phase 2b study ^[2]. Kirkland & Ellis LLP is acting as legal counsel to Lilly; Goodwin Procter LLP is counsel to Versanis, with Cooley LLP advising on patent matters and J.P. Morgan and Company as financial advisor ^[2].