Roche to Buy 89bio for Up to $3.5 Billion in Obesity Push

(Bloomberg) — Roche Holding AG agreed to buy biopharmaceutical company 89bio Inc. for as much as $3.5 billion, another acquisition to position itself in the booming market to treat obesity and related illnesses.

89bio, which develops therapies for metabolic diseases, has a key drug in late-stage development for a condition called MASH, which occurs when too much fat builds up in the liver.

Roche is snapping up companies to carve a position in obesity and metabolic diseases, a field dominated by Novo Nordisk A/S and Eli Lilly & Co. MASH, seen as a multibillion-dollar opportunity, has lured drugmakers from GSK Plc to Novo, meaning the Swiss company will face fierce competition.

89bio’s experimental medicine pegozafermin is a potential blockbuster that could be combined with some of Roche’s other drugs in development, analysts said.

Roche agreed to pay $14.50 per share in cash for San Francisco-based 89bio and up to $6 per share later if certain milestones are met, for a total deal value of as much as $3.5 billion, the Swiss company said in a statement. The price represents a premium of almost 80% compared with 89bio’s Wednesday closing price. Both boards backed the deal.

89bio shares more than doubled in premarket trading before paring some of the gains to trade about 88% higher at $15. Roche rose less than 1% in Zurich. The stock is up about 2% so far this year.

MASH develops when fat builds up in the liver, causing inflammation and potentially leading to more serious conditions like cirrhosis and cancer.

“As we see a global rise in obesity and type 2 diabetes, we’re really seeing just an explosion of MASH patients,” Teresa Graham, Roche’s pharmaceutical unit chief, said in an interview.

Many companies have faced setbacks in the race to develop drugs for the disease, formerly known as NASH. Graham expressed optimism that pegozafermin’s mode of action, which hits directly at the disease, would make the drug competitive. GLP-1s like Novo’s Wegovy may reduce the incidence of MASH by denting obesity, yet the blockbuster would also be a direct rival since it’s now cleared to treat the condition.

Other drugmakers including GSK have also recently made moves involving drugs for MASH, which is short for metabolic dysfunction-associated steatohepatitis.

Roche’s biggest recent deals in the metabolism field include a $5.3 billion partnership with Zealand Pharma A/S and the $3.1 billion acquisition of Carmot Therapeutics Inc.

The 89bio transaction brings “a potential blockbuster that addresses a high-unmet medical need and offers itself for combo therapies with other Roche assets,” Vontobel analyst Stefan Schneider wrote in a note.

Tariff Tension

The 89bio deal is expected to close in the fourth quarter.

As it pushes into obesity and metabolic diseases, the company has hired Novo senior executive Morten Lammert as global therapeutic area head for cardiovascular, renal and metabolism.

Roche also finds itself in the spotlight due to the Trump administration’s focus on Switzerland’s pharma industry, the country’s biggest exporter. The industry is exempt from the 39% tariff rate the US has imposed, but Commerce Secretary Howard Lutnick has pointed to drugmakers as part responsible for Switzerland’s trade surplus with the US. Roche, whose diagnostics unit is already affected, has pledged to invest $50 billion in the US in the next five years.

–With assistance from Naomi Kresge, Lisa Pham, James Cone and Subrat Patnaik.

(Updates with 89bio pre-market trading in sixth paragraph)

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