Updated version: Zealand Pharma reaches an AI weight-loss drug deal with Generate valued at up to 1.2 billions USD.

Supplemented with an introduction on obesity treatment, AI-based drug development, and related background.

Reuters, October 13 - Danish obesity drug developer Zealand Pharma (ZELA.CO) has partnered with American biotechnology company Generate Biomedicines (GENB.O) to use artificial intelligence to develop protein-based therapies targeting obesity and other metabolic diseases, in a deal worth up to $1.2 billion.

The two companies said on Tuesday that Generate will receive a $30 million upfront payment, as well as up to $35 million in early preclinical milestone payments, and is eligible to receive nearly $1.2 billion in total milestone payments. Generate’s share price rose approximately 5% in after-hours trading.

This deal comes as pharmaceutical companies race to develop new obesity treatments to overcome the limitations of bestselling GLP-1 weight-loss drugs sold by Novo Nordisk (NOVOb.CO) and Eli Lilly (LLY.N). The success of these drugs has fueled an investment frenzy in the obesity market, with companies testing new approaches aimed at improving efficacy, convenience, or side effects.

Generate, a biotechnology company backed by Flagship Pioneering, went public earlier this year (link), and develops protein-based drugs using AI-driven technology. Under the agreement, Generate will lead the entire process from candidate drug screening through research, while Zealand will be responsible for clinical development, regulatory filing, and global commercialization.

The collaboration will focus on multispecific protein therapies, which are drugs designed to target multiple biological targets simultaneously. Zealand said that such therapies can address multiple disease pathways related to obesity with a single drug, and as pharmaceutical companies seek more effective treatments, this approach is receiving increasing attention.

Zealand has traditionally focused on peptide drugs and is currently working with Roche (ROPC.S) to develop the weight-loss drug petrelintide, as part of a deal the two signed last year worth up to $5.3 billion.

Earlier this month, Zealand announced positive results from a mid-stage clinical trial (link), showing that the therapy helped overweight and obese patients with type 2 diabetes to lose up to 9.2% of their weight.

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