Pfizer Halts Development of Twice-Daily Weight-Loss Drug Due to High Dropout Rates and Side Effects

These drugs, known as GLP-1 agonists, have already generated substantial revenue.

Pfizer (PFE.N) made a significant announcement on Friday, revealing that it would not be advancing a twice-daily version of the oral weight-loss drug danuglipron into late-stage studies.

This decision came after a midstage trial saw a high dropout rate among patients due to severe side effects such as nausea and vomiting. Consequently, Pfizer’s shares took a hit, falling by 5%.

Pfizer is not giving up entirely on the weight-loss pill; they still have a once-daily version in development.

The company hopes that modifying the drug’s release mechanism will help mitigate side effects.

However, data on this reformulated version won’t be available until the first half of the upcoming year.

This development is indeed a setback for Pfizer’s ambitions in the burgeoning obesity market, which analysts predict will be worth $100 billion by the end of the decade.

Danuglipron falls into the same category of injected diabetes and obesity treatments as Novo Nordisk’s Wegovy and Ozempic, and Eli Lilly’s Mounjaro and Zepbound.

These drugs, known as GLP-1 agonists, have already generated substantial revenue.

GLP-1 agonists were initially designed for type 2 diabetes treatment.

They mimic the action of the GLP-1 hormone, regulating blood sugar, slowing digestion, and suppressing appetite.

Both Lilly and Novo are currently in late-stage development with oral versions of their respective drugs, with Novo planning to seek approval for a high-dose oral version this year, and Lilly aiming for a 2025 launch.

While Eli Lilly shares saw a slight increase, Novo Nordisk’s shares rebounded from an earlier 1% loss following Pfizer’s announcement.

Analysts remain uncertain about whether Pfizer’s reformulated drug will offer a better tolerability profile for patients.

Barclays analyst Carter Gould expressed that the once-daily version may still hold some hope for Pfizer’s obesity strategy but hinted that external assets might be necessary to fully capitalize on the market opportunity.

In the mid-stage trial, Pfizer reported that the drug reduced weight by up to 13% in adults with obesity and without type 2 diabetes after 32 weeks, compared to Eli Lilly’s experimental oral drug, which achieved a 15% reduction at 36 weeks with a high dose.

Pfizer characterized the side effects in the twice-daily version as mild, but the dropout rate was high, with over half of the patients discontinuing the drug, compared to a 40% discontinuation rate in the placebo group.

In contrast, Altimmune (ALT.O), a much smaller company with a market value of under $200 million, announced that its experimental obesity drug reduced weight by up to 15.6% in a mid-stage trial of 391 patients over 48 weeks.

This news resulted in Altimmune’s shares surging by more than 45% to $4.61.

Danuglipron holds a prominent position in Pfizer’s drug development pipeline, as the company seeks to offset declining revenue from its COVID-19 vaccine and treatment. Pfizer’s shares have dropped by over 40% this year due to falling sales of its COVID products and concerns about potential competition for its top-selling drugs.

Pfizer previously unveiled a $3.5 billion cost-cutting initiative in October but has not disclosed specific details about the planned cuts. CEO Albert Bourla has expressed hopes that an obesity pill could eventually become a $10-billion-a-year product for the company.

Analysts like TD Cowen’s Steve Scala see this recent outcome as worse than anticipated for a program that was already playing catch-up.