Pfizer (NYSE:PFE), a global pharmaceutical giant, recently faced a setback in its quest to capture a significant share of the burgeoning weight loss drug market. The company announced its decision to discontinue the development of a twice-daily version of its experimental weight loss pill, danuglipron, following mixed results in a mid-stage clinical trial. This move has sparked interest in Pfizer's strategic directions and market prospects, especially as it seeks to diversify beyond its COVID-19 portfolio.
The trial revealed that while obese patients experienced substantial weight loss, the pill's tolerability was a significant concern. High rates of mild, mostly gastrointestinal, side effects were observed, leading to a considerable number of participants discontinuing the drug. Pfizer's decision not to advance danuglipron into Phase 3 studies marks a critical juncture, particularly as the company eyes a $10 billion opportunity in the weight loss drug sector.
Pfizer, however, is not throwing in the towel. It is now focusing on a once-daily version of danuglipron, with data expected in the first half of 2024 to determine the feasibility of Phase 3 trials.
It has been a tough year for Pfizer, as the healthcare stock has plummeted more than 40% amid a decline in COVID vaccine demand. The company needs a growth catalyst to get investors bullish on the stock. But the good news is that it’s trading at a forward price-to-earnings multiple of less than 10, which gives investors a good margin of safety. If you’re willing to be patient with the company in the midst of a transition period, Pfizer could make for a good long-term buy.
