Pfizer, Bayer Partner on Obesity Drugs

Pfizer(PFE) is buying exclusive worldwide rights to an experimental class of Bayer(BAY) obesity drugs.

According to the licensing agreement, Bayer will receive an upfront fee, milestone payments and royalties on sales of the drugs. The companies did not disclose specific financial terms of the deal, which is subject to antitrust approval but expected to close in the second half of the year.

"Obesity and diabetes are expanding hand-in-hand at near epidemic levels throughout the world. The need for new treatment options for patients has never been greater," said Dr. Martin Mackay, head of Pfizer's worldwide research and technology group. "We are excited about the potential of the DGAT-1 inhibitors in the areas of obesity and type 2 diabetes which complement Pfizer's ongoing metabolic disease research programs," Mackay said.

Pfizer's shares lifted 4 cents Wednesday, to $23.08.

The drugs, called DGAT-1 inhibitors, could potentially treat obesity, type 2 diabetes and related disorders by modifying fat metabolism. The lead drug in that class, BAY 74-4113, is currently in phase I trials, the earliest stage of human testing, which involve studying a drug's safety and looking for an indication of efficacy in patients.

Through the agreement, Pfizer is joining a number of drug developers that recognize that the obesity market is ripe for a new treatment since concerns have surfaced regarding the side effects and limited efficacy of Roche's Xenical and Abbott's(ABT) Meridia.

However, New York-based Pfizer's could be pitting itself against Sanofi-Aventis'(SNY) obesity drug Acomplia, whose approval is anticipated later this year. But the FDA previously refused to approve the drug, saying the company needed to provide additional data before it could be approved. Accomplia is also being considered as a smoking-cessation treatment.