Dive Brief:

• Novo Nordisk agreed to buy metabolic disorder specialist Inversago Pharma in a deal worth as much as about $1.1 billion as the Danish company works to strengthen its leading position in the obesity drug market.

• Inversago’s lead experimental drug has shown promise for weight loss in a Phase 1b trial and is being tested in Phase 2 for diabetic kidney disease, Novo said Thursday. The privately held Canadian company is also developing treatments for other metabolic and fibrotic disorders.

• Novo didn’t release further financial details of the transaction, which includes potential payments for reaching certain developmental and commercial goals. The companies expect the acquisition to close by the end of the year, after which Novo intends to investigate the potential of Inversago’s lead drug in “obesity and obesity-related complications.”

Dive Insight:

Novo is riding high on the success of its weight loss injection Wegovy and diabetes treatment Ozempic, which contains the same active ingredient as Wegovy and has been widely used off label to treat obesity. The company’s sales jumped 30% in the first half of 2023, and Novo raised its guidance for both revenue and operating profit growth for the full year.

The already strong sales base is likely to be supercharged by results released this week from a massive study that showed Wegovy could reduce the risk of cardiovascular complications for overweight people with heart disease. Analysts expect the research to help persuade insurers who have been reluctant to pay for weight-loss medicines that they have significant health benefits worth covering.

While Novo leads the market, competitors are coming up fast. The news from the Wegovy heart trial also boosted Eli Lilly, which has a diabetes treatment called Mounjaro that has shown significant weight loss benefits in clinical trials. Behind Lilly is a group of would-be rivals that include Pfizer and Amgen.

Inversago’s experimental drug adds to a Novo pipeline that includes a number of potential obesity treatments in Phases 1, 2 and 3. The company is also working on a more convenient pill version of Wegovy that succeeded in a Phase 3 trial in May.

The buyout of Inversago is part of a strategic shift for Novo, which historically wasn’t known for acquisitions. In recent years, the company has bought Dicerna Pharmaceuticals and Forma Therapeutics and partnered with startups like Dewpoint Therapeutics and Aspect Biosystems.

Based in Montreal, Inversago got its start with a license agreement with the U.S. National Institutes of Health originally proposed in 2015. The company announced a Series A financing of $7 million in 2018, following that up with $35 million in Series B funding in 2020 and a $70 million Series C last year. The Dutch venture capital firm Forbion is now Inversago’s largest shareholder.