Pfizer (PFE 0.36%) has not performed well in recent years, as demand for its coronavirus products has plummeted. Meanwhile, several of the company’s newer launches haven’t made much of an impact on its financial results, while it is racing toward an important patent cliff — that of Eliquis, an anticoagulant and one of its best-selling drugs — by the end of the decade. However, management has a plan to turn things around. Pfizer has a deep pipeline that could help it rejuvenate its lineup. One area the company hopes to dominate is the weight management drug market, which is growing rapidly and could exceed $100 billion in sales by the next decade. Could Pfizer become the leader in this niche?
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Pfizer’s weight management candidates
Pfizer had to discontinue the development of some of its internally developed anti-obesity products due to safety concerns. But it beefed up its pipeline thanks to an acquisition. In November, the pharmaceutical leader bought Metsera, a biotech with several promising weight-loss candidates, for $7 billion in cash (excluding potential additional milestone payments). Pfizer inherited Metsera’s lead weight-loss asset, MET-097i, a GLP-1 medicine that appears highly promising.
In a pair of phase 2b studies, the investigational medicine demonstrated strong weight-loss efficacy — patients on MET-097i had a mean placebo-subtracted weight loss of up to 14.1% after 28 weeks — along with excellent tolerability. Also, MET-097i has the potential for monthly dosing, which might give it a significant advantage over the current leading weight-loss options, which are administered weekly.
MET-097i is now undergoing phase 3 clinical trials. Pfizer does have other candidates it inherited from Metsera. And the drugmaker hasn’t given up on all of its internally developed programs either. One of them is an investigational weight-loss pill called PF-07976016 that is currently in phase 2 studies. Oral weight-loss medicines have brought brand-new patients to the anti-obesity market, so this is another promising candidate.
Overall, Pfizer’s portfolio features several differentiated products. The company has one of the more promising pipelines in this area.
Today’s Change
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Current Price
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$24.97 – $25.65
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It won’t be easy to take the crown
Pfizer will have to go up against many pharmaceutical giants in this field, including the current leaders, Eli Lilly (LLY +0.76%) and Novo Nordisk (NVO 2.25%). Both have highly effective drugs in their current lineups as well as deep pipelines. Take Eli Lilly, whose next-gen anti-obesity medicine, retatrutide, posted impressive phase 3 clinical trial results that rival weight loss numbers we typically see in bariatric surgeries. Retatrutide has an advantage: It is a triple agonist, which means it combats obesity by simultaneously activating three distinct hormone receptors.
As of now, there is no such drug approved by the U.S. Food and Drug Administration. Retatrutide could be the first. Novo Nordisk isn’t too far behind. The company also has several triple agonists in its pipeline, including one that recently posted highly encouraging mid-stage results. Eli Lilly and Novo Nordisk also have an advantage, having been the biggest players in the adjacent diabetes market over the past few decades. Beyond the two leaders, other drugmakers are also making progress.
For instance, Amgen‘s (AMGN 1.40%) MariTide is undergoing phase 3 studies as a potential treatment for obesity and several other conditions. MariTide is also a long-acting therapy that could be administered monthly (or less frequently).
What does this mean for Pfizer?
It’s too soon to know which company will be the biggest winner in the weight loss market, but if I were a betting man, my money wouldn’t be on Pfizer — it would be on Eli Lilly. However, Pfizer does not need to dominate this area to turn its business around. There is room for multiple winners in this field, and the company is well-positioned to be one of them, given its deep pipeline.
Pfizer also has promising candidates in other therapeutic areas that should make meaningful progress over the next few years, especially in oncology. Meanwhile, several of the company’s products are still posting decent sales growth. Finally, Pfizer is a terrific dividend stock. It offers a forward yield of 6.9% and has continued to increase its payouts despite the headwinds it has encountered in recent years. That makes it a top pick for investors seeking reliable, blue chip dividend stocks.
