Novo Nordisk doubles down on Valo, betting $190M near-term to apply AI to obesity and diabetes

Novo Nordisk is doubling down on its collaboration with Valo Health, committing up to $190 million in near-term payments—and billions on the back end—to apply artificial intelligence to up to 20 programs.

The Danish drugmaker began working with Valo, a Flagship Pioneering company with big ambitions for AI, in 2023. That deal was worth $60 million upfront, gave Novo three cardiovascular assets and set the stage for work on up to 11 programs overall. Novo was primarily focused on cardiovascular disease in the original deal and on the hook for up to $2.7 billion in milestones.

The new deal expands the focus to cover Novo’s defining indications—obesity and Type 2 diabetes—and increases the program cap to 20. If the programs hit their milestones, Valo could receive $4.6 billion from Novo plus R&D funding and potential royalty payments.

Novo’s broader strategy is to expand beyond diabetes and obesity, its core areas, and into other diseases with a metabolic component. The original deal’s focus on cardiovascular disease was a reflection of that strategy. Yet, while Novo’s road map includes liver and kidney diseases, the expanded deal covers the core therapeutic areas rather than branching out into other fields. 

Novo decided to expand the deal after seeing the original collaboration identify novel targets that could lead to differentiated cardiometabolic programs. The partners are advancing multiple small molecules through drug discovery in pursuit of the opportunities.

Landing a deal with Novo, a company that knows the platform better than most, provides a boost for Valo at a tricky moment for the biotech. Valo reported the failure of a phase 2 dia­bet­ic retinopa­thy trial at the end of last year. The study represented an early clinical test of Valo’s plan to transform R&D using AI, real-world patient data and human tissue modeling.