Dec 18 (Reuters) - Merck ( MRK ) on Wednesday signed a

deal worth up to $2 billion with Hansoh Pharma to

develop and sell the Chinese biotech's experimental oral obesity

drug that works similar to the popular weight-loss treatments

Wegovy and Zepbound.

Merck ( MRK ) said it will pay $112 million upfront for an exclusive

license to the drug known as HS-10535. Under the deal, Hansoh

will be eligible to receive up to $1.9 billion in development

and regulatory milestone payments as well as royalties on sales.

While market leading treatments Novo Nordisk's

Wegovy and Eli Lilly's ( LLY ) Zepbound, known as GLP-1 drugs,

are both injectables, Hansoh's drug can be taken orally.

Drugmakers such as Amgen ( AMGN ), Structure Therapeutics ( GPCR )

and Viking, as well as Novo and Lilly are also

developing oral weight-loss treatments in the hopes of providing

patients with a convenient dosing option.

Hansoh's drug is currently in preclinical stage of testing,

which is typically conducted on animals. It is several years

away from being commercially launched.

Merck ( MRK ) had previously said it is focused on second- and

third-generation opportunities, such as oral versions as well as

those with additional potential benefits from weight-loss

treatments.

"Through this agreement, we aim to build on our experience

targeting incretin biology to evaluate HS-10535 and its

potential to provide additional cardiometabolic benefits beyond

weight reduction," said Merck Research Laboratories president

Dean Li.

Merck ( MRK ) is developing its own GLP-1 candidate, efinopegdutide,

for a type of serious fatty liver disease known as metabolic

dysfunction-associated steatohepatitis (MASH). Shares of the

U.S. drugmaker rose about 2% to $101.75 in premarket trading.

GLP-1 drugs help slow digestion and reduce hunger by

triggering a feeling of fullness. Some analysts expect the

market for these weight-loss treatments to reach the $150

billion mark in the early 2030s.