Obesity drugs’ value explodes
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.
Inflation hits savings accounts
Inflation has sapped 40% of Americans of their pandemic savings, making consumer spending even more reliant on the job market.
Generous government stimulus payments and lockdowns that kept people at home led to “windfall” savings, Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, said in a research note Monday.
How much of it remains has been a moving target, with economists upping their estimate of pandemic-era savings last month after earlier saying it was nearly gone.
By Santander’s count, much of it still remains at least in nominal terms.
Bank deposits and money market balances are up by 51% over 2019 levels for the top 1% of Americans by income, and up by 14% even for the bottom 40%, the bank said, citing Federal Reserve data.
However, adjusting for inflation takes out a huge bite, with liquid assets among that bottom 40% cohort now down 1% compared with the pre-pandemic period.
From wire reportsStanley pegs the inflation rate at 15% over that period, based on the government’s Personal Consumption Expenditures index.
“The prevailing narrative is that households were presented with a windfall during the pandemic and proceeded to spend like drunken sailors until the money ran out,” Stanley said.
“Unfortunately, households have seen their beefed-up nest eggs get eaten away by inflation over the past two years.”
Consumers’ lack of buying power helps explain poor consumer confidence, he said, with the University of Michigan’s consumer sentiment index sitting at a six-month low.