Nov 20 (Reuters) - Eli Lilly LLY.N and Hong Kong-listed Laekna 2105.HK will collaborate to develop an experimental obesity drug that aims to help patients lose weight while preserving muscle, the biotech said on Wednesday.

WHY IT MATTERS

Lilly is aiming to strengthen its position as a leader in the obesity treatment market, which is expected to hit $150 billion in revenue by the next decade. Last year, the company spent about $2 billion to acquire Versanis' drug that acts directly on fat cells, without prompting lean mass loss.

Several other drugmakers including Regeneron REGN.O and Scholar Rock SRRK.O are testing treatments that could help preserve muscle, which is often lost when patients lose weight through lifestyle changes, bariatric surgery or the use of GLP-1 treatments such as Lilly's Zepbound and Novo Nordisk's NOVOb.CO Wegovy.

CONTEXT

The collaboration will accelerate the development of Laekna's experimental drug, LAE102, which belongs to a class of drugs that play a key role in muscle regeneration as well as the breakdown and storage of fat for energy.

Lilly will fund the development of the drug and share its resources and expertise, but Laekna will retain the global rights for the drug and plans to advance the early-stage trial of the drug in China.

Laekna said the drug has shown to increase lean mass and decrease fat mass in lab studies. In combination with a GLP-1 treatment, it could further reduce fat mass and help patients significantly regain the lean mass lost during weight loss.

(Reporting by Bhanvi Satija in Bengaluru; Editing by Shinjini Ganguli)

((Bhanvi.Satija@thomsonreuters.com; Outside U.S. +91 9873062788;))