The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Aimee Donnellan

LONDON, Oct 9 (Reuters Breakingviews) - Novo Nordisk NOVOb.CO is doubling down on obesity. On Thursday, the $264 billion maker of weight loss drugs Ozempic and Wegovy paid $5.2 billion for New York-listed Akero Therapeutics AKRO.O, which makes treatments for fatty liver disease. CEO Mike Doustdar argues that bulking up in a condition that affects 250 million people makes sense. But the deal may leave the group even more exposed to the rapidly-changing market for weight loss therapies.

Doustdar is not alone in targeting fatty liver disease. The condition, known as metabolic dysfunction-associated steatohepatitis (MASH) is common in around 80% of people who are overweight. In the past month, Pfizer PFE.N paid over $7 billion for Metsera MTSR.O, and Roche ROG.S bought 89bio, both of which are developing drugs for the condition. Novo already has an iron in the fire: its blockbuster treatment Wegovy was approved by the Food and Drug Administration to treat the disease in August. But Akero's product, which has yet to be approved, gives it a new, potentially more powerful therapy, which could also be offered to people in combination with weight loss drugs like Wegovy.

Doustdar is getting a relatively good price. Analyst forecasts compiled by Visible Alpha expect Akero to deliver $1.09 billion of operating profit by 2031. Tax that at 21% and the return on the $4.5 billion purchase price, net of cash, is around 19%. Still, that's six years away, and Akero is likely to generate operating losses until at least 2029, as per Visible Alpha.

Moreover, the deal does little to address Novo Nordisk’s far larger problem. The group still makes almost all of its sales from obesity or diabetes treatments. Yet semaglutide, the active ingredient in its weight loss drugs Ozempic and Wegovy, is coming off patent in the U.S. in 2031. Other drugmakers like Roche and AstraZeneca AZN.L are also working on rival products. A likely flood of new treatments and cheap generic drugs will drive down prices and threaten Novo’s obesity franchise. It may even mean fewer patients with fatty liver disease, which would erode the Akero business that the Danish group has just acquired. Doustdar may have found a promising remedy, but Novo Nordisk's key disease will require a bigger M&A cure.

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CONTEXT NEWS

Novo Nordisk said on October 9 it would buy U.S.-based Akero Therapeutics for up to $5.2 billion.

Akero is testing its drug, efruxifermin, in a late-stage trial of patients with severe liver scarring, or cirrhosis, due to a type of fatty liver disease known as metabolic dysfunction-associated steatohepatitis (MASH).

Efruxifermin could be a potential breakthrough in treatment of fatty liver disease and become a “cornerstone” treatment either on its own or in combination with Wegovy, Novo Nordisk CEO Mike Doustdar said in a statement.

Under the deal, Novo would pay Akero shareholders $54 per share upfront in cash, which represents a premium of about 16.2% to Akero’s last close of $46.49 on October 8.

The Danish drugmaker will also pay an additional $6 per share to Akero’s shareholders if efruxifermin secures a full U.S. approval for the condition by June 30, 2031, the companies said.

Shares of Akero jumped more than 19% in premarket trading, while Novo’s Denmark-listed shares were down nearly 2%.

(Editing by Neil Unmack; Production by Oliver Taslic)

((For previous columns by the author, Reuters customers can click on DONNELLAN/Aimee.Donnellan@thomsonreuters.com))