(Yicai) Dec. 19 -- Merck Sharp & Dohme said the US pharmaceutical giant will pay up to USD2 billion to acquire the global license to develop and commercialize a diabetes and weight loss drug candidate developed by China's Hansoh Pharmaceutical Group.

MSD and Hansoh have inked an exclusive global license agreement for HS-10535, an investigational preclinical oral small molecule glucagon-like peptide-1 receptor agonist, the pair announced in separate statements yesterday.

GLP-1 is a polypeptide hormone released by the intestine after eating. It can stimulate islet beta cells to secrete insulin and get involved in the regulation of blood sugar balance in the body.

Hansoh will receive an upfront payment of USD112 million and is eligible for milestone payments of up to USD1.9 billion associated with the development, regulatory approval, commercialization of the candidate, and royalties on sales, the two firms noted, adding that the Shanghai-based company may co-promote or solely commercialize the drug in China subject to certain conditions.

"We continue to leverage science-driven business development to augment and complement our robust pipeline," said Li Yaodi, president of MSD Research Laboratories. "Through this agreement, we aim to build on our experience targeting incretin biology to evaluate HS-10535 and its potential to provide additional cardiometabolic benefits beyond weight reduction."

GLP-1 receptor agonist is designed as a diabetes drug to control patients' blood glucose levels but has also become a popular treatment for weight loss in recent years, as it can suppress appetite and delay gastric emptying.

Danish insulin and weight loss drug manufacturer Novo Nordisk has the only GLP-1 receptor agonist in the world available in injection and oral versions. Its Semaglutide got the nod in China as a diabetes treatment in April 2021 and weight loss treatment in June, inspiring a dozen domestic drug makers to follow suit.

Established in 1995, Hansoh has marketed seven innovative drugs, focusing on oncology, anti-infectives, central nervous system diseases, metabolic diseases, and autoimmune diseases. Its net profit surged 111 percent to CNY2.7 billion (USD370.5 million) in the six months ended June 30 from a year ago, while its revenue jumped 44 percent to CNY6.5 billion, according to its latest earnings report.

Editor: Martin Kadiev