Competition in weight loss drugs intensifies as pill market grows

The weight loss products market is gaining importance as numerous companies look for a way to break the dominance of market leaders Novo Nordisk (NVO) and Eli Lilly (LLY) by introducing GLP-1 pills.

New data released last week by Roche (RHHBY), Novo and a smaller biotech company show that an oral version could be as effective as injections, but Wall Street is waiting to see whether patients will prefer a daily pill to a weekly or monthly injection.

Roche last week presented data from an early phase 1 clinical trial that showed its pill led to a 6.1% weight loss over four weeks. The study's sample size was small, just 12 patients, which is typical for early-stage trials.

For this reason, experts remain vigilant and wait for data from later phases of studies to demonstrate market potential.

Roche's data are similar to those of other companies already in the race for oral GLP-1 treatment, including Pfizer (PFE), Novo and Lilly. Pfizer recently released data from Phase 2 clinical trials for its once-daily danugliprone showing weight loss of up to 11.7% after 32 weeks.

The frontrunner is Lilly's orforglipron, which showed weight loss of up to 14.7% after 36 weeks in Phase 2 trials. It has set the bar high for other competitors and gives investors confidence in the current injectable drug leader's ability to gain market share.

“As we think about key innovations in the obesity market, we continue to expect many of them to come from LLY and Novo, with many newer potential entrants offering limited differentiation from the programs already being pushed by the market leaders,” JPMorgan analyst Chris Schott wrote in a note to clients last week.

New data

One way companies can differentiate themselves from the competition is by causing fewer unpleasant side effects.

Despite the positive news about the weight loss results, Roche's share price suffered a setback last week, losing 5.4 percent, after concerns emerged about the pill's side effects.

But all GLP-1 preparations, including the current batch of injectables, have side effects such as nausea, vomiting and dizziness. The concern that began when injectables came on the market is now spilling over into testing for tablets.

“It is important to keep in mind that in 28-day studies, doses are titrated much more rapidly to maximize treatment time at the full dose than would be the case in real-life use and longer-term Phase 2 and 3 trials. Therefore, we expect to see an improvement in tolerability profiles,” said Etzer Darout, an analyst at BMO Capital Markets, in a note to clients last week.

But the higher prevalence of negative side effects at lower doses in Roche's trial appears to be a greater cause for concern, especially as it lags behind other competitors such as Lilly's orforglipron, which is currently in Phase 3.

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For this reason, Schott of JPM expressed his concerns to Roche.

“We expect this agent to have a limited role as its efficacy/tolerability profile is likely to be inferior to that of orforglipron and potential market entry is possible in 2029-2031 (i.e. 3+ years after orforglipron),” Schott wrote.

Room for competition?

Meanwhile, Novo and biotechnology company Terns Pharmaceuticals also released data on their oral GLP-1 candidates last week.

Novo's oral candidate looks promising – data shows it outperforming the company's own injectable weight-loss drug Wegovy. After 12 weeks of taking the pill, patients lost 13.1 percent of their weight, compared with 6 percent in Wegovy's early trial.

Terns showed that its early-stage candidate resulted in a 4.9 percent weight loss in four weeks, consistent with competitors. However, the company said it will begin phase two of testing next year, putting it even further behind schedule than other, better-equipped pharmaceutical companies. Still, the company's efforts are increasing choice in what some doctors say will be a highly competitive field.

Given the large number of similar products entering the market and the strong focus of investors on the current market leaders, the question arises as to what added value new market entrants offer.

Dr. Michael Weintraub, an endocrinologist and obesity medicine specialist at NYU Langone Health in New York City, says competition is necessary because not all patients are the same.

He expects any new drug to prove more useful in treating other obesity-related diseases, such as heart disease, sleep apnea and liver disease, an area that pharmaceutical companies are already exploring with their GLP-1 candidates.

“No two patients respond the same way. Right now, we can't divide these patients into groups — or say which drug will work for our particular patient. So in that sense, the more options, the better,” Weintraub told Yahoo Finance.

Anjalee Khemlani is the senior health reporter at Yahoo Finance and covers all things related to pharma, insurance, care services, digital health, PBMs, and health policy and policy. This of course includes GLP-1. Follow Anjalee on most social media platforms @AnjKhem.

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