Pfizer expects the market for new obesity pills to be $90 billion per year. Lilly, Novo, and many biotechs hope to claim chunks of it.
Dreamstime
The disappointing data
Pfizer
announced on its obesity pill are opening up opportunities for biotechs developing their own oral weight-loss drugs.
Drugmakers are increasingly focused on the emerging market for highly effective obesity pills, which appear to be the next logical step following the arrival of injectable weight-loss drugs from
Eli Lilly
and
Novo Nordisk
that has shaken the health-care sector this year.
Pfizer
has said it expects the market for the new obesity pills to be $90 billion per year, and Lilly, Novo, and a long list of biotechs are working on drugs they hope will claim a chunk of those revenue.
On Friday, however, Pfizer said it would stop development of a twice-daily version of its experimental weight loss pill danuglipron, after a Phase 2b trial showed that the drug’s side effect profile was unacceptable.
Pfizer says it is continuing to work on a once-daily version of the drug, though the efficacy results in the trial of the twice-daily pill were below expectations. That could knock Pfizer out of contention in the obesity-pill market showdown, at least for the time being, as Lilly moves forward with its own oral product, and Novo works on a high-dose version of its current weight-loss pill.
Pfizer’s disappointment, however, improves the prospects of the biotechs working on their own drugs, which had seemed to run the risk of being squashed in the competition among Pfizer, Lilly, and Novo.
There will be more room for the biotechs’ drugs to compete, but it raises the possibility that Pfizer could seek to buy a way out of the weight-loss pill problems by acquiring one of them.
The Friday updates “suggest PFE is now multiple years behind LLY, Novo Nordisk, and the host of other companies developing oral and next-generation anti-obesity medications,” Goldman Sachs analyst Chris Shibutani wrote in a Friday note. “We would not be surprised if PFE’s business development strategy increases focus on companies in the metabolic space with clinical-stage assets.”
Shares of
Viking Therapeutics,
which is developing an oral obesity treatment currently in Phase 1 trials, rose 6.5% on Friday, and 15.9% on Monday. Shares of
Terns Pharmaceuticals,
which also has an oral obesity drug in Phase 1 trials, jumped 17.3% on Friday, and gained16.3% on Monday.
Structure Therapeutics,
which has an obesity pill in Phase 2 trials, saw its American depositary receipts jump 7% on Friday, and gain 7.7% on Monday.
Shares of
Altimmune
climbed 13% on Friday and 29.7% on Monday, after the company announced positive data on a Phase 2 trial of its weight loss drug.
The drugs under development by the biotechs are subtly different, and analysts are beginning to speculate as to which one Pfizer might want to acquire. In a note on Sunday, Oppenheimer analyst Jay Olson wrote that Viking “may offer a valuable portfolio with attractive valuation” to Pfizer. Phase 1 data on Viking’s pill will come early next year.
Biotechs with anti-obesity pills under development continue to be a hot target for acquirers. On Monday,
Roche Holding
announced a $2.7 billion acquisition of privately held U.S. biotech Carmot Therapeutics,, which is developing a number of anti-obesity treatments, including a once-daily pill currently in Phase 1 trials.
AstraZeneca
announced its own deal in November, a licensing agreement with the Chinese biotech Eccogene to develop a once-daily obesity pill.
Pfizer has spent heavily on acquisitions in recent years, but its oral obesity efforts have come from its internal pipeline. Those drugs have faced significant challenges. Pfizer dropped an earlier alternative to danuglipron, called lotiglipron, in June of this year, citing worry over signals of liver toxicity.
Write to Josh Nathan-Kazis at [email protected]
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