Weight loss translates into profits for investors. Just look at Eli Lilly And Novo Nordisk. Both stocks have risen dramatically thanks in large part to their obesity drugs, with Lilly's stock more than quadrupling and Novo's stock more than tripling over the past three years.
while, Pfizer's (NYSE: PFE) Fortunes have taken a different course. Great Medicine stock It declined as sales of its Covid-19 products declined. But can Pfizer challenge Lilly and Novo Nordisk in the obesity market?
Mysterious look
Pfizer had high hopes for danoglibron, a GLP-1 agonist like Novo Nordisk's Ozempic and Wegovy. However, those hopes took a hit after the company announced results from a phase 2 study of the twice-daily oral formulation of the drug. The side effects were so bad that Pfizer chose not to advance twice-daily danoglibron into late-stage testing.
But Pfizer did not give up on the program. The drugmaker still has a phase 1 study evaluating the once-daily formulation of danoglipron. It's fair to say that Wall Street is skeptical about the drug's prospects. during Pfizer's recent Q1 earnings callone analyst asked a question by saying that “the outlook for danuglipron is not good.”
As expected, Pfizer management did not touch this statement with a 10-foot pole. CEO Albert Bourla noted that the company has three experimental obesity drugs in clinical testing. However, the only other program targeting obesity listed on Pfizer's website is the early-stage candidate PF-07976016.
I would say the outlook for danuglipron is ambiguous at best. Pfizer expects to report results about midyear from a study evaluating the once-daily formulation of the drug. The company “will make a decision on future plans” after looking at the data, Bourla said on the first-quarter call.
What about acquisition?
Pfizer has not been shy about using its treasure chest built largely through its COVID-19 vaccine to acquire other biopharmaceutical companies. It even expects about $25 billion in additional annual revenue by 2030 from business development deals. Therefore, the obvious solution for Pfizer is to acquire another company that has a promising obesity drug.
Viking Remedies He seems like a great candidate. The company announced very positive results from a Phase 2 study of an injectable version of its experimental obesity drug VK2735 earlier this year. Viking also announced encouraging results from a phase 1 study of an oral version of the drug.
All immunity is another possibility. In March, the small pharmaceutical company announced positive results from a phase 2 study of the obesity drug bemfedotide.
However, Pfizer CFO Dave Denton said on the first-quarter call that he does not expect any additional acquisitions in the near term. He said that the company's most important capital allocation priorities are supporting dividends and repaying debt.
Weighed in
With all this in mind, you might think that Pfizer's chances of competing against Lilly's Mounjaro/Zepbound franchise and Novo Nordisk's Ozempic/Wegovy franchise any time soon are slim to none. But I'm not sure about that.
Pfizer has historically been a big player in the metabolic market and “obesity is a very big part of it,” Bourla said on the first-quarter call. He even declared that “this is an area we have a right to win.” This suggests to me that Pfizer doesn't intend to let a major weight loss opportunity pass them by.
The analyst who said Danoglibron's outlook was not good was probably right. We'll know more in the next few months after Pfizer announces data from its phase 1 trial. If these results aren't promising, I guess you can dismiss Denton's comments about not expecting any acquisitions in the near term.
My original question was: “Can Pfizer challenge Lilly and Novo Nordisk in the obesity market?” The answer to this is a resounding “yes.” Pfizer could certainly challenge Lilly and Novo if it wanted to. I believe it will be a player in this huge market – even if it requires buying another company to make it happen.
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Keith Speights He has positions at Pfizer. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Novo Nordisk. The Motley Fool has Disclosure policy.
Can Pfizer challenge Lilly and Novo Nordisk in the obesity market? Originally published by The Motley Fool
