Pfizer
is approaching a do-or-die milestone in the coming weeks, as it prepares to unveil new data on its weight-loss pill. If the drug works well, Pfizer could capture some of the investor enthusiasm that has blasted the share prices of
Novo Nordisk
and
Eli Lilly
into the stratosphere this year.
Good news can’t come soon enough.
Pfizer
(ticker: PFE) shares are down 39% this year as of Tuesday, and are trading just above their 52-week low. Neither a string of new drug launches nor the pending $43 billion acquisition of the cancer-focused biotech
Seagen
(SGEN) has done much to shake investors’ fixation with plummeting Covid-19 franchise revenues and an impending patent cliff that the company says will chip away $17 billion in annual revenues by the end of the decade.
Data from the Phase 2b trial of the weight-loss pill danuglipron is Pfizer’s best shot at changing the narrative. Investors have shown little enthusiasm so far for danuglipron, which in its current formulation must be taken twice daily. Competing pills under development from Lilly (LLY), Novo (NVO), and
Structure Therapeutics
(GPCR), will only need to be taken once a day.
But if the drug works well and has minimal safety risks, analysts say it could give Pfizer a chunk of the oral obesity pill market, which is expected to be worth tens of billions of dollars a year by the end of the decade.
That could be enough to inject some energy into the stock. Jefferies analyst Akash Tewari, who upgraded Pfizer shares to a Buy from a Hold in mid-October, wrote on Oct. 30 that the logic behind his upgrade is largely contingent on positive data from the danuglipron trial.
“While there’s incremental long-term upside on PFE, our pitch really doesn’t ‘work’ unless Danuglipron’s [Phase 2] data…proves the skeptics wrong by posting competitive,” Tewari wrote. “Nothing beats the power of a narrative trade like obesity in a ‘higher for longer’ [market].”
Pfizer has said it expects to report results of the trial before the end of the year. Below, four big questions investors are asking ahead of the announcement.
What is danuglipron, and what will the trial tell us about it?
Danuglipron is a GLP-1 receptor agonist, similar to the drug that Novo markets under the name Wegovy. Much of the focus on the new, highly effective weight-loss drugs from Novo and Lilly has been on injectable versions. But companies are also working on more convenient pill forms. Novo already sells an oral version of Wegovy under the name Rybelsus, and is testing a more-effective, higher-dose version. Lilly is testing a pill called orfoglipron, while Structure has presented promising early data on one called GSBR-1290.
Pfizer announced in June that it was dropping development of an experimental oral GLP-1 called lotiglipron, and moving forward with danuglipron. Investors were disappointed, as lotiglipron had been a once-daily pill, while danuglipron is twice-daily.
The current trial tested danuglipron in adults with obesity who do not have diabetes. (An earlier Phase 2 trial tested danuglipron in adults with diabetes.) It enrolled 630 patients, and will measure the change between their baseline weight and their weight after 26 or 32 weeks, depending on the cohort.
What would a positive result look like?
The benchmark for success is likely somewhere around the 14.7% body weight loss that patients on the highest dose of Lilly’s orfoglipron experienced after 36 weeks in that drug’s recent Phase 2 trial.
In a note on Oct. 2, Cantor Fitzgerald analyst Louise Chen wrote that doctors tell her that “~15% absolute weight loss is good enough to convince them to switch from injectables,” which have achieved 20% weight loss.
What could go wrong?
The drug’s efficacy could fall short, of course.
Beyond that, the big risks are around safety and tolerability. Leerink Partners analyst David Risinger wrote in a recent note that the proportion of patients who discontinue treatment with danuglipron is expected to be higher than those who discontinued treatment with orfoglipron, in part because the total daily dosage of danuglipron is far higher. What matters is how high those discontinuation rates are.
Analysts are also concerned about liver toxicity, given some issues Pfizer cited when it dropped developed of lotiglipron. Risinger writes that he will want to see the detailed results of the trial to learn more about any possible liver concerns, and that those likely won’t come until the first half of next year.
Could this be a once-daily drug?
Even if the results of the trial are great, concerns about the drug being taken twice-daily will linger. Pfizer executives said on an earnings call on Oct. 31 that they are already thinking about danuglipron as a once-a-day medication, and that they will have data on a once-a-day formulation early in 2024.
The big question is whether that formulation will be ready for a danuglipron Phase 3 trial. In response to a question on an investor call, Pfizer chief scientific officer Mikael Dolsten said that it is “within our reach” for Pfizer to begin a Phase 3 pivotal trial next year with the once-a-day version. That would be an important step toward Food and Drug Administration approval.
Write to Josh Nathan-Kazis at [email protected]
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