Obesity Stole The Q3 Show

Excitement over the potentially broad health benefits of glucagon-like peptide 1 (GLP-1) agonists and other new mechanisms for obesity and cardiovascular/metabolic conditions is spreading across the sector. The topic dominated the third quarter conference calls of the two market leaders in the therapeutic area, Novo Nordisk A/S and Eli Lilly and Company, but obesity was also a hot topic of discussion during investor calls by Pfizer Inc., Amgen, Inc. and AstraZeneca PLC, companies that are all vying to get into the lucrative market.

Altogether, it was a relatively quiet third quarter sales and earnings period for the top pharmaceutical manufacturers with no surprise announcements or big unexpected financial upsets, with the exception of Pfizer. The company lowered its 2023 sales and earnings forecast by $9bn ahead of its third quarter sales and earnings announcement with the change coming entirely from lower than expected sales of its two COVID-19 products, the vaccine Comirnaty and the antiviral Paxlovid. (Also see "‘It’s A Very Different Story,’ Pfizer CEO Bourla Says Of Cuts To Match COVID Revenue" - Scrip, 16 Oct, 2023.) 

The news raises questions about the long-term outlook for the COVID-19 business, but the change was not particularly surprising to investors given COVID has been hard to predict and 2023 is widely considered a transition year for Pfizer.

Among the other top pharmaceutical companies, AbbVie and Bristol Myers confronted headwinds from the loss of exclusivity of key drugs, Humira (adalimumab) and Revlimid (lenalidomide), respectively, and both had lower top-line sales as a result. Others, however, demonstrated modest to moderate sales growth in the quarter. (See Exhibit 1.)

The two standouts in the quarter were Novo Nordisk and Lilly, both of which delivered impressive growth driven by new drugs for diabetes and obesity. The success of those products is driving investor enthusiasm across the sector and other drug makers want a piece of the ballooning market.

Growth Investors Dream Of

Novo sells the GLP-1 agonist semaglutide as Ozempic for diabetes and Wegovy for obesity, while Lilly sells the GIP/GLP-1 agonist tirzepatide for diabetes as Mounjaro and for obesity as Zepbound. Zepbound was only just approved by the US Food and Drug Administration on 8 November and so it did not contribute to third quarter sales and earnings results, though Mounjaro has presumably been being used off label for obesity as well as for its approved diabetes indication.

Sales of Wegovy skyrocketed 750% year-over-year to $1.37bn and sales of Ozempic increased 45% to $3.39bn, Novo Nordisk reported. The company’s top line grew 29% to DKK58.73 ($8.53bn), and the strong performance led Novo to increase its 2023 sales growth forecast to 32%-38% growth over 2022. (Also see "Wegovy Buoys Novo Nordisk To Highest-Ever Sales" - Scrip, 2 Nov, 2023.)The company’s dramatic growth is coming even as the supply of semaglutide is constrained and sales are restricted largely to the US market.

Sales of Mounjaro were also impressive, despite the drug only having launched last year. Mounjaro generated $1.4bn in the third quarter, substantial growth sequentially over the prior quarter when it generated $980m. Sales of Mounjaro helped drive Lilly’s sales up 37% to $9.5bn. (Also see "Lilly Sees Massive Growth For Mounjaro Ahead Of Obesity Approval" - Scrip, 2 Nov, 2023.)

Now, with Zepbound approved by FDA, the new obesity product is expected to help address some of the demand for obesity medicines. In a media call, outlining the launch of Zepbound, CEO David Ricks said the company has the manufacturing capacity to meet the demand and said the company is preparing for a “big, bold’ launch.

Analysts have enormous long-term projections for anti-obesity medications, particularly after Novo Nordisk reported positive cardiovascular outcomes data on Wegovy, suggesting the drugs have broad benefits beyond weight loss, which will make it harder for payers to deny coverage. Wolfe research analyst Tim Anderson, for example, forecast in an 18 August report following the SELECT top-line data readout that the US obesity drug market could reach more than $103bn by 2030, up from an expected $8bn in 2023.

Leerink analyst David Risinger raised his long-term financial forecasts for Eli Lilly in August on the strength of the company’s incretin franchise to revenues to $83.1bn in 2030, driven by peak incretin franchise sales of more than $60bn. In addition to Mounjaro and Zepbound, Lilly is developing an oral GLP-1 agonist in Phase III and is also testing a GLP-1, GIP and glucagon receptor (GGG) triagonist called retatrutide.

GLP-1 FOMO

With those kinds of forecasts for the anti-obesity market, it is no surprise that other players are trying to edge their way in. In fact, the situation is becoming reminiscent of the early PD-1/L1 days, when nearly every top pharma company with a presence in cancer was scrambling to bring their own product into late-stage development.

Pfizer, Amgen and, most recently, AstraZeneca have all jumped into the space, raising questions about how the products will be differentiated and whether or not rivals that are late to market will be able to carve out space in the competitive area. With the first generation of drugs already demonstrating impressive weight loss in patients with obesity, drug makers are turning their attention to addressing some of the limitations of existing medications: tolerability, convenience and better quality weight loss. (Also see "The Next Frontier In Obesity: Better, Not More, Weight Loss" - Scrip, 6 Nov, 2023.)

AstraZeneca used its third quarter financial update on 9 November to simultaneously announce a licensing deal for an oral GLP-1 agonist from Eccogene Co. Ltd. The company said it hopes to build a presence in the therapeutic area by leveraging its current strength in cardiovascular and metabolic disease with drugs like its blockbuster Farxiga (dapagliflozin) for diabetes and heart failure.

The aim is test the oral GLP-1 in combination with Farxiga and other products like an oral PCSK9 inhibitor in development for high cholesterol. (Also see "AstraZeneca Moves Into Obesity With Eye On Combinations" - Scrip, 9 Nov, 2023.)

In a meeting with reporters in New York City the next day on 10 November, CEO Pascal Soriot further revealed that AstraZeneca is also developing an internal asset that could provide improved quality weight loss, resulting in fat loss while retaining more muscle, that the company also hopes to test in combination with newly licensed asset. (Also see "AstraZeneca CEO Soriot On Obesity, Gene Therapy And More" - Scrip, 13 Nov, 2023.)

Obesity dominated Pfizer’s third quarter sales and earnings call on 31 October, even though management did not mention the Phase II oral GLP-1 candidate danuglipron during the prepared remarks, focusing on new launches like the respiratory syncytial virus (RSV) vaccine Abrysvo instead.

That only worried investors, who felt the company might be trying to downplay enthusiasm for danuglipron. Analysts repeatedly pressed CEO Albert Bourla and worldwide president-R&D Mikael Dolsten for more details on the timing of the Phase II data release and whether or not management had seen some of the data yet.

“On danu, there is not much to say,” Bourla insisted during the conference call. “Clearly, when you are moving ahead with program like that, you need to see the totality of the data and we are working now intensively to be able to have those data presented by the end of the year.”

Dolsten said Pfizer had a broad effort ongoing in the therapeutic area, beyond just danuglipron, which is currently dosed twice a day; potentially a disadvantage over other orals that could reach the market.

“We are building a platform around the GLP-1 area and also obesity in general with multiple different mechanisms and compounds,” Dolsten said. “You will see more new mechanisms also coming from Pfizer.”

But until the Phase II data reads out, investors are unlikely to be appeased.

In a 15 November note, Wolfe’s Anderson returned to the topic. “Danuglipron is THE pipeline product investors are focused on at this point,” he said “Pfizer presumably knows this. It is therefore odd (to us, at least) that Pfizer did not make any mention of danuglipron in prepared remarks during its recent Q3 earnings call. This, despite the fact the primary completion of the trial has lapsed (listed on CT.gov as Sept. 13, 2023).”

“It begs the question, is Pfizer trying to walk down expectations by not talking about it?” Anderson asked.

Mystery Adds Intrigue

Amgen, Inc.’s obesity pipeline is also getting attention from investors, even though its lead candidate is further behind in development and little is known about a second program in development.

Analysts pressed management at Amgen for more details on the programs during the company’s 31 October conference call. Amgen’s most advanced drug is a bispecific glucose-dependent insulinotropic polypeptide receptor (GIPR) antagonist and GLP-1 receptor agonist called maridebart cafraglutide. It is in Phase II testing and would be an injectable product but could offer longer dosing interval options over existing treatments, which the company is studying.

Amgen also has an orally administered drug in Phase I development, but it has not disclosed the mechanism of action for competitive reasons. (Also see "Amgen’s Plan To Go Big In Obesity" - Scrip, 12 Sep, 2023.) The undisclosed information around that drug continues to intrigue investors, analysts and industry watchers.

Executive VP David Reese said the second program AMG 786 is an orthogonal mechanism of action and Phase I data should be available in the first half of 2024.

“It’s a high bar in this field, and we’d have to see the sort of profile that would give us the confidence to invest broadly in a molecule like that,” he said. “We’ve got a suite of preclinical molecules, many of them non-incretin based in terms of mechanism of action that we’ll be bringing forward over the next few years,” he added.

With excitement over the obesity market continuing to mount as new data show the drugs can deliver benefits on important cardiovascular outcomes, its likely even more pharmaceutical companies will invest in the area before it is considered over-saturated.