Both Pfizer (NYSE: PFE) and Roche Holdings (OTC: RHHBY) rank among the world's most powerful pharmaceutical companies. Yet neither is actively competing in the all-important market for weight loss drugs, which is currently being split between the likes of Novo Nordisk and Eli Lilly.
Still, both have ongoing plans to develop weight loss pills. If those plans pan out, the returns are likely to be enormous. So which of these dark horse competitors has the better shot at catching up to the leaders and staking out a claim for themselves? Let's dive in and find out.
The case for Pfizer
Pfizer's most discussed weight loss program for the moment is danuglipron, and it's currently in phase 1 clinical trials. The pill is formulated for once-per-day administration, and the company has already stated an intent to proceed to phase 2 trials in the second half of this year. But danuglipron isn't exactly an asset that investors should get excited about.
In a prior phase 2b study that wrapped up late in 2023, a slightly different formulation of the candidate, intended for twice-per-day administration, didn't quite cut the mustard.
More than 50% of patients discontinued their participation before receiving the full 32 weeks of treatment in the study. Patients taking lower doses of danuglipron quit at the same rates as those who took higher doses. Of those who remained, they experienced an average placebo-adjusted weight reduction of between 8% and 13% of their body mass. While the trial technically met its primary objective of showing statistically significant weight loss, Pfizer opted not to advance the candidate into phase 3 trials.
The ongoing phase 1 trial may not see patients exit at such a high rate due to testing a new formulation of the molecule. Some improvements in efficacy may be in the cards as well.
But investors should appreciate that the setup here is bearish, not bullish for the company's chances of becoming a leading weight loss stock. The fact that a different clinical-stage weight loss program from Pfizer was terminated last year due to safety signals does not offer much in the way of a vote of confidence either.
Of course, Pfizer could simply buy a promising weight loss biotech, license a new candidate, or purchase promising pharmaceutical assets for weight loss so that it could get back into the running. Given its $11.9 billion in cash, equivalents, and investments as of Q1, it can even afford to pick up more than one new option. But until management actually makes such a move, there isn't much reason to bet on this business as a weight loss stock underdog.
Roche has a promising candidate cooking
Roche isn't having the same problems as Pfizer with its oral pill candidate, CT-996. Intended for once-daily administration, it's currently in phase 1 clinical trials, and the preliminary results are already looking tremendous.
Per the company's interim report from phase 1, after four weeks of treatment there weren't any patients who chose to depart from the study due to side effects or discomfort. That already makes CT-996 look very preferable to danuglipron. And on average, patients shed a placebo-adjusted 6.1% of their weight in the same period. Furthermore, there wasn't any tapering of the candidate's effects observed, and patients didn't need to take their pill with (or without) food to get the maximum effect.
So CT-996 has all the makings of a highly competitive weight loss drug product. Proceeding to a phase 2 investigation is practically guaranteed. It is fully possible that further research will uncover issues with the candidate, which is something that investors need to be aware of. Still, when viewed in comparison to the effectiveness and tolerability of the injected products sold by Eli Lilly and Novo Nordisk today, known by the trade names Zepbound and Wegovy, respectively, CT-996 has a real chance of performing even better on the metrics that matter.
In other words, despite the early stage of its program, Roche could very credibly grab a share of the market in a few years, assuming the remaining clinical trials go well. Its $12.5 billion in cash and investments also leaves the door to making acquisitions even more wide open than Pfizer's. That makes it a genuine dark horse weight loss stock, and thus it's a far better option for getting exposure to the anti-obesity medicines market than Pfizer right now.
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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Novo Nordisk and Roche Ag. The Motley Fool has a disclosure policy.
