Kailera: Betting on China's R&D for the next weight-loss miracle drug

John Milligan, Kailera’s chairman, has been amazed by studies showing obesity drugs’ benefits beyond weight loss. “It shows how important metabolic health is to longevity,” he says. Image: VICTOR J. BLUE / BLOOMBERG VIA GETTY IMAGES

Zamani wasted no time with the obesity drug, quickly partnering with Cambridge, Massachusetts–based VC shop Atlas Venture and New York’s RTW Investments. The three firms inves­ted $400 million to spin up Kailera Therapeutics in October, launching with a licence for the four Hengrui therapies and a plan to shepherd them to market. Having a ready-made portfolio of four drugs should allow Kailera to move fast in a space that has become extremely competitive since Ozempic became a household name. Global sales of the category ballooned 50 percent last year, to $36 billion, and could more than triple again, to $131 billion, by 2028, according to Durham, North Carolina–based research firm Iqvia Institute for Human Data Science.

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To run Kailera, the investors hired an all-star: Ron Renaud, a 56-year-old former biotech stock analyst with a nearly unequalled track record of building biotech startups and then selling them for big profits. Over the past decade, Renaud has run and sold three companies—Idenix (focussed on hepatitis C), Translate Bio (an mRNA therapeutics company) and Cerevel (centered on neurological diseases)—for a total of $16 billion.

“We have probably the most advanced, diverse, late-stage pipeline that is focussed exclusively on weight management, outside of Big Pharma,” he says.

By going to China, Kailera skipped years of research and lab work. Renaud now plans to move aggressively with Phase III clinical trials in the US for that first drug in hopes of bringing it to market by 2030 if not sooner. That might sound a long way off, but in the scheme of drug development and approval, it’s lightning-fast, thanks to Hengrui’s early work. If all goes well, Kailera’s first drug should launch ahead of competitors that are now doing early- and mid-stage clinical trials. And the fact that Kailera’s licensing deal with Hengrui includes two drugs that can be taken orally is a potentially huge advantage in a market currently dominated by injectable drugs. Pills are such a big deal that Lilly had stockpiled some $550 million worth of its oral GLP-1 weight loss drug orforglipron at year end despite not having FDA approval. Pills, after all, are not only less intimidating for patients but also cost far less to produce and distribute.

Some 40 percent of American adults are obese. That means there is currently a pool of over 100 million people who could qualify medically for one of Kailera’s therapeutics. And that, Renaud says, is before you account for a rising obesity rate, the global market beyond the States or the potential for these drugs to treat related conditions, including cardiovascular disease and even some cancers. “That is an incredible market opportunity,” he says. “That’s not going to be addressed by a single drug, or two, or three.”

“I don’t know how you make decisions about medicines unless you understand things at the low level, and Ron was that person—he always understood his business down to the low level,” says John Milligan, the former CEO of Gilead Sciences, who is now Kailera’s chairman. (The two first met in the early 2000s when Milligan was Gilead’s CFO and Renaud was a biotech analyst who refused to put a “buy” on the then-high-flying stock.)

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For Kailera, the next step is getting its first drug ready to go through FDA approval while building out research and manufacturing in the US. Large-scale clinical trials like those required for weight loss drugs cost a fortune, and Kailera will need to raise funds, almost certainly hundreds of millions, to cover the expense. While Renaud won’t talk about what the company might be worth, PitchBook says it was valued at $595 million at its initial funding. Early-stage publicly traded obesity biotechs Metsera and Viking Therapeutics sport market caps in the $3 billion range.

In October, Renaud hired Scott Wasserman, who served as Amgen’s first cardiologist and built its cardiovascular and metabolic portfolios, as its chief medical officer. Then, in January, he brought on one of the country’s top obesity drug marketers as his chief commercial officer: Jamie Coleman. Her prior gig? Repping Zepbound for Lilly.

Chairman Milligan figures the obesity field is far larger than those of HIV and hepatitis C when he was leading Gilead, which had a recent market cap of $133 billion. “We can build a substantial company if we can raise enough capital and fend off acquisitions, which is hard to do in this industry,” he says. If it can’t, Kailera may go the way of Renaud’s previous efforts and wind up being sold to one of the major pharmaceutical firms, adding a fourth notch to his belt and potentially billions of dollars more in upside.