Pfizer Stock: The One Caveat Investors Missed With Its Ozempic Rival
It's the heyday for a specific class of diabetes drugs, an analyst said Tuesday after Pfizer (PFE) stock surged on the results of its study in patients with diabetes.
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On Monday, a paper from the Journal of the American Medical Association said patients who took Pfizer's twice-day pill, dubbed danuglipron, lost roughly 10 pounds over 16 weeks. Danuglipron belongs to the same drug class as Novo Nordisk's (NVO) once-weekly shot Ozempic. Both diabetes treatments mimic a gut hormone called glucagon-like peptide-1 to control blood sugar.
But there's a caveat, says Evercore ISI analyst Umer Raffat. Pfizer hasn't committed to sending danuglipron into Phase 3 testing. Instead, the company is waiting on Phase 2 results of another drug, dubbed lotiglipron, that's part of a class of what is called the GLP-1 category.
Lotiglipron is a once-daily pill, so it could have a convenience advantage over danuglipron. That would be a boon for Pfizer stock as it trails Novo in diabetes and obesity treatment.
"If a stock can gain $10 billion-plus in market cap on a drug which may not move forward, we are clearly in the heyday of GLPs," Raffat said in a note to clients.
On today's stock market, Pfizer shares tacked on 2.3%, ending the regular session at 39.64. Pfizer stock surged 5.4% on Monday.
Pfizer Stock: Faster Weight Loss Vs. Novo
The JAMA paper suggests Pfizer's danuglipron leads to faster weight loss in patients with type 2 diabetes than Ozempic. In Ozempic's Phase 3 study, patients lost about 10 pounds over 30 weeks. A high dose of Pfizer's drug performed the same feat over 16 weeks.
GLP-1 drugs long have been used in diabetes treatment. But they're gaining newfound steam for their potential to treat obesity. Novo Nordisk leads the market with the only obesity treatment, Wegovy. But the active ingredient behind Wegovy and Ozempic, semaglutide, is in short supply.
Meanwhile, Eli Lilly (LLY) is testing its diabetes drug, Mounjaro, in patients with obesity. Part of the mechanism behind Mounjaro also activates GLP-1. Amgen (AMGN) and Viking Therapeutics (VKTX) are also testing approaches that mimic GLP-1 in obesity treatment.
Raffat says the oral GLP-1 is "one of the highest value pipeline programs for Pfizer." But the firm is waiting on midstage test results for lotiglipron before deciding which oral GLP-1 to send into Phase 3 testing. Pfizer is testing lotiglipron against Novo's daily diabetes pill, Rybelsus. Those results are due later this year.
"Given the competitive landscape with Lilly once-daily pill, Pfizer is likely included toward the second GLP-1," he said. He has an outperform rating on Pfizer stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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Source: Investor's Business Daily
