Novo Nordisk expands AI drug development partnership with Valo Health

Danish pharmaceutical giant Novo Nordisk is strengthening its collaboration with a United States tech firm Valo Health to develop new treatments for obesity, diabetes, and cardiovascular diseases using artificial intelligence and human data. The agreement, originally signed in 2023, has been expanded to cover up to 20 drug candidates, nearly doubling the initial scope of 11 treatments.

The expansion comes as Novo seeks to maintain its competitive edge in the booming obesity drug market, expected to be worth $150 billion in the next decade. A recent clinical trial for its weight-loss drug candidate, CagriSema, delivered underwhelming results, increasing pressure to develop a successor to its best-selling drug, Wegovy. Rival pharmaceutical company Eli Lilly is also pushing forward with its own obesity treatments, intensifying the race for dominance in the sector.

Under the revised deal, Valo Health will receive up to $190 million in near-term payments and milestone payments of around $4.6 billion, significantly increasing its earnings potential compared to the original agreement, which offered up to $2.7 billion. Novo hopes the collaboration will lead to groundbreaking therapies that extend the health benefits of weight-loss drugs beyond obesity treatment.