AstraZeneca is the latest player to enter the weight-loss drug space, a market that some analysts say could reach $100 billion by 2030. On Thursday, the biopharmaceutical company announced it had entered into a licensing agreement with Eccogene for ECC5004 , an oral glucagon-like peptide 1 receptor agonist. This drug, which could fight diseases such as diabetes and obesity, would be a novelty since current anti-obesity drugs are all administered by weekly injection. The GLP-1 drug market is currently dominated by two players: Novo Nordisk, which sells the type 2 diabetes treatment Ozempic and the weight loss drug Wegovy, and Eli Lilly, which sells Mounjaro as a type 2 diabetes treatment. Lilly has just had the weight-loss version of its drug, Zepbound, approved by the Food and Drug Administration. Lilly and Novo Nordisk are also working on oral medications for obesity. With more than 40% of U.S. adults suffering from obesity, according to the Centers for Disease Control and Prevention, analysts said the market is large enough to accommodate multiple players. It’s still early days for AstraZeneca’s drug ECC5004, which is being evaluated in a U.S.-based phase 1 trial involving patients with type 2 diabetes. Under the licensing agreement, AstraZeneca will pay Eccogene $185 million upfront, and up to $1.825 billion in future milestones and royalties on sales. AstraZeneca also receives all exclusive global rights to the drug, except for the Chinese market. AstraZeneca’s U.S.-traded shares have fallen 5% so far this year. On Thursday’s news, AstraZeneca shares jumped more than 1%. In the short term, UBS analyst Colin White expects a “mildly positive reaction” from the stock due to the licensing agreement and the increase in his forecast for total revenue growth and basic earnings per share. AZN 1D mountain AZN 1D stock chart The partnership suggests bright prospects for AstraZeneca shares, especially given the biopharmaceutical company’s portfolio of existing drugs, according to Wall Street analysts. “This asset expands Astra’s existing obesity portfolio, including the GLP-1/glucagon dual agonist. [AZD9550] and long-acting amylin analogue [AZD6234]”, wrote James Gordon, an analyst at JPMorgan Cazenove. He currently considers AstraZeneca shares to be overweight. “ECC5004 is said to have high bioavailability, encouraging efficacy at low doses, has a wide therapeutic window potentially without the need for “a dose titration and has the potential to be,” said Mark Purcell, an analyst at Morgan Stanley. AstraZeneca’s Farxiga, for example, treats type 2 diabetes. Purcell rated AstraZeneca shares with a rating overweight, calling the name a “top choice.” CNBC’s Michael Bloom and Christina Cheddar-Berk contributed to this report.
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