Neurocrine wants to develop new obesity drugs. It's making an acquisition to accelerate that move.

By Jaimy Lee

The company is purchasing Soleno Therapeutics for $2.9 billion

Neurocrine Biosciences plans to buy Soleno Therapeutics.

Neurocrine Biosciences is betting that a $2.9 billion acquisition of a biopharmaceutical company could speed up its strategy to start developing new treatments for obesity.

Soleno Therapeutics' (SLNO) stock soared 34.5% in premarket trading on Monday after the deal was announced. The Financial Times first reported that Neurocrine was inching closer to a deal to buy the company. Neurocrine's stock (NBIX) was down 2.8%.

Soleno is a Bay Area biotech that markets VYKAT XR, which was approved last year to treat Prader-Willi syndrome, a rare genetic disease that causes patients to feel hungry all the time. That means they end up developing obesity along with having intellectual disabilities and behavioral issues. It affects about 10,000 to 20,000 people in the U.S.

As part of the deal, Neurocrine is obtaining its first therapy for metabolic disorders - one that is on track to bring in $450 million in revenue this year. Before the acquisition was announced, BMO Capital Markets analysts described the potential deal as a "more sensible way into metabolic disease" than Neurocrine's announcement in December that it would start testing CRF1 and CRF2 receptor antagonists for obesity.

"While GLP-1s - the epicenter of obesity today - [are] highly competitive, we can also agree that there is tremendous opportunity for new mechanisms, new combinations, delivered a bit differently," Jude Onyia, Neurocrine's chief scientific officer, told investors at that time. "We believe that CRF2 [offers] an important and attractive and differentiated entry into the obesity space."

GLP-1 drugs like Eli Lilly's (LLY) Zepbound and Novo Nordisk's (NVO) (DK:NOVO.B) Wegovy have radically changed the way obesity is treated, and their runaway successes have triggered a race among drugmakers and biotechs to develop better therapies for obesity and other metabolic disorders.

Neurocrine already markets Crenessity, an oral CRF1 receptor antagonist used to treat congenital adrenal hyperplasia, which is a collection of genetic disorders affecting the adrenal glands. One issue for patients with the disease is that they struggle to maintain healthy blood pressure and blood sugar.

Neurocrine is betting that its experience working on CRF1 receptor antagonists could yield a better muscle-preserving treatment for obesity. One concern about the currently available GLP-1 drugs is that when patients lose weight, they lose mostly muscle instead of fat.

Soleno is selling for $53.00 a share in cash, a 36% premium to the company's closing price of $39.50 on Thursday.

Neurocrine's stock is down 6.4% so far this year, while Soleno's shares have tumbled 16.3%.

-Jaimy Lee

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04-06-26 0717ET