Obesity drug investors get windfall after Roche buys into frenzy

Carmot Therapeutics Inc. was valued at $1.25 billion in May. Half a year later, the company is selling to Swiss drugmaker Roche Holding AG for more than double that amount, fueled by the frenzied demand for obesity medicines.

Carmot has three weight-loss medicines in its labs, including an experimental pill, at a time when global pharma giants are racing to get into a market that could reach $100 billion by the end of the decade.

The Column Group, the venture capital firm, is Carmot’s biggest investor with a 40% stake, according to a regulatory filing.

Others include RA Capital, Deep Track Capital, which led the company’s last funding round in May, and Horizons Ventures, the private investment arm of Hong Kong tycoon Li Ka-shing.

Roche on Monday agreed to pay $2.7 billion for closely held Carmot as interest in weight-loss treatments booms.

If the drugs meet certain milestones, the Berkeley, California-based company’s investors stand to get another $400 million.

The company filed for an initial public offering last month, and was said to seek a valuation of more than $1 billion.

Horizons co-led a $15 million financing round for Carmot in 2018 with Column.

Given the potential size of the market, investors are casting about for other companies that could attract the attention of acquirers seeking weight-loss treatments.

Potential targets include Viking Therapeutics Inc., Altimmune Inc. and Structure Therapeutics Inc., according to Michael Shah, a Bloomberg Intelligence analyst.