IP Group plc LON:IPO has highlighted the potential for future royalty revenues tied to breakthrough obesity drug candidates under development by Metsera Inc., following the US pharmaceutical giant Pfizer’s agreement to acquire the biotech start-up for up to $7.3bn.
Pfizer announced in September that it had reached a definitive deal to buy Metsera and its next-generation obesity portfolio, valuing the company at up to $7.3bn, including $4.9bn in upfront cash. The transaction underscores intensifying competition in the global race to develop more effective and convenient treatments for obesity, a market projected to exceed $100bn within the decade.
What’s special about Metsera?
Metsera’s pipeline includes four drug candidates in clinical development and several next-generation programmes in IND-enabling studies. These therapies aim to improve efficacy and patient adherence through fewer injections and enhanced tolerability — a key differentiator as rivals race to build on the success of first-generation GLP-1 drugs such as Novo Nordisk’s Wegovy and Eli Lilly’s Mounjaro.
IP Group, which invests in early-stage science and innovation ventures, retains a financial interest in a number of Metsera’s obesity programmes following Metsera’s 2023 acquisition of Zihipp, a former IP Group portfolio company spun out from Imperial College London.
IP Group owns and exclusively licenses to Zihipp certain underlying intellectual property linked to Metsera’s lead candidate, MET-097i, and other compounds including MET-233, MET-034 and MET-067.
How does IP Group benefit?
Under the terms of its agreements, IP Group is entitled to a share of future economic returns through milestone and royalty payments should these candidates progress to commercialisation. The group’s royalties are structured as tiered, low single-digit percentages on net sales of licensed products, alongside technical and commercial milestone payments.
Half of all proceeds received by IP Group from Metsera are payable to Imperial College London under an existing revenue-sharing arrangement. The company cautioned that such royalties remain contingent on regulatory approval and successful product launches.
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Momentum around Metsera’s programmes strengthened in late September when the company reported positive Phase 2b data for MET-097i, its most advanced GLP-1 therapeutic candidate. Metsera plans to initiate a global Phase 3 trial in late 2025.
The injectable therapy is designed for monthly administration (a significant improvement on current weekly regimens) while offering competitive efficacy, scalability, and tolerability. Industry analysts have suggested such advances could reshape patient adherence patterns and expand access to obesity treatments globally.
Greg Smith, IP Group’s chief executive, said the progress underscored the long-term potential of the firm’s early-stage science investment model.
“We are encouraged by Metsera’s Phase 2b results for MET-097i and its plans to initiate Phase 3 in 2025,” he said. “Obesity is a global health challenge, and Metsera’s next-generation programmes could ease pressure on healthcare systems through fewer injections and better tolerability. As Metsera advances its portfolio, IP Group’s shareholders are positioned to benefit, primarily through sustainable royalty income, should these therapies achieve approval and commercial traction.”
The origins of MET-097i trace back to research by Professor Steve Bloom of Imperial College London’s Department of Metabolism, Digestion and Reproduction. Bloom’s 1996 discovery that GLP-1 influences appetite regulation laid the groundwork for the current generation of obesity drugs. His subsequent collaboration with IP Group, Imperial’s commercialisation partner, helped refine the science that was ultimately spun out into Zihipp.
At the time of its sale to Metsera in 2023, IP Group held a 31% stake in Zihipp. The firm remains entitled to upfront, deferred and contingent payments under the share purchase agreement, in addition to the licensing revenues tied to the GLP-1 portfolio. All proceeds will continue to be shared equally with Imperial College London after relevant costs and third-party deductions.
