Lilly buys Versanis for up to $1.93 billion to chase muscle-sparing weight loss

Eli Lilly said on July 14, 2023, that it will acquire Versanis Bio, a private biotech company, for as much as $1.93 billion ^[1]. The deal gives Lilly access to bimagrumab, an antibody drug designed to help people lose fat while protecting lean muscle mass, a growing concern for patients on GLP-1 weight-loss drugs ^[1].

Under the agreement, Versanis shareholders could receive up to $1.925 billion in cash, made up of an upfront payment plus additional payments tied to development and sales milestones ^[2]. Lilly shares rose 3% after the announcement ^[1]. Versanis licensed bimagrumab from Novartis, and the drug is currently being tested in the Phase 2b BELIEVE study, both on its own and combined with semaglutide, the active ingredient in Novo Nordisk's Ozempic and Wegovy ^[2]. Bimagrumab is also in early-stage trials as a possible treatment for heart failure in people with obesity ^[1].

Bimagrumab works differently from GLP-1 drugs. It binds to activin type II A and B receptors to block activin and myostatin signaling, acting directly on fat cells rather than suppressing appetite ^[1][2]. Lilly said combining incretin drugs with bimagrumab has the potential to reduce fat mass while preserving muscle, which the company said "may lead to better outcomes" for people with obesity and related complications ^[2].

Ruth Gimeno, a Lilly group vice president overseeing diabetes, obesity and cardiometabolic research, said obesity affects more than 100 million Americans and that pairing Lilly's incretin expertise with Versanis's knowledge of activin biology could unlock new treatment combinations ^[2]. Analysts expect the broader weight-loss drug market to reach up to $100 billion within a decade, with Lilly and Novo Nordisk positioned as early leaders ^[1].

Why it matters for patients

One widely cited concern about GLP-1 medications, including semaglutide and tirzepatide, is that people can lose lean muscle mass along with fat during weight loss ^[1]. BMO Capital Markets analyst Evan Seigerman said calorie restriction from these drugs can affect both fat and muscle, and that Lilly may be able to "tip the scales in favor of more fat loss" by combining an incretin with a drug meant to encourage muscle retention or gain ^[1].

For patients, this deal signals that drugmakers are actively researching ways to address the muscle-loss trade-off tied to current weight-loss treatments. However, bimagrumab is still an experimental drug being studied in combination with semaglutide in a mid-stage trial, not an approved product available to patients ^[1][2]. The sources do not say when or whether this combination approach will reach the market, what side effects it might carry, or how it would compare in cost or effectiveness to existing GLP-1 medications.

What happens next

The acquisition was announced July 14, 2023, and remained subject to customary closing conditions at that time ^[2]. Lilly said it would determine how to account for the transaction under accounting rules once the deal closes, which could affect the company's financial results and guidance ^[2]. Bimagrumab was being tested in the Phase 2b BELIEVE study, both alone and alongside semaglutide, though the sources do not specify a completion date or timeline for further trial results ^[2]. The sources do not provide any update on the status of the combination research beyond this announcement.