Roche Shares Slump on Oral Weight-Loss Drug Candidate Side Effects

By Helena Smolak

Roche's stock fell after new data from an early-stage clinical trial of its closely watched oral weight-loss drug candidate prompted analysts to question the company's potential to quickly enter a booming obesity market.

Shares in the Swiss pharma giant fell 4.5% in early European trading. The stock has gained 5% year to date, having jumped 7% in July after Roche said the once-daily drug, acquired through its $3 billion-plus Carmot Therapeutics deal, helped patients lose 7.3% of their body weight within four weeks.

Roche revealed tolerability data of its oral weight loss drug Phase 1 study, known as CT-996 and being developed to treat both Type 2 diabetes and obesity, late Wednesday at the European Association for the Study of Diabetes meeting in Madrid. The company said the drug was generally well tolerated, but some patients showed gastrointestinal side effects that were consistent with similar drugs at an early stage of development.

However, analysts said the latest data could lead to questions about the drug's efficacy and a safety profile that was worse than that of competitors, which they attributed to rapid dose increases, or titration.

"Investor excitement for Roche's obesity franchise may now take a pause, in our view, given both acquired assets [oral and injectable candidate] showed higher-than-anticipated gastrointestinal side effects, albeit both underpinned by aggressive titration schedules," Jefferies analysts said in a note to clients.

The competitive weight loss that Roche's drug candidate achieved seemed to be driven by rapid dosage, and its true competitive profile isn't yet visible, Jefferies added. UBS analysts said they expected the drug's lead in efficacy to be questioned.

Vontobel analysts expect the company will need to work on the drug's dosing schedule, potentially also for its injectable weight loss drug candidate, in a Phase 2 study, which could lead to a delay of the drug launch.

Roche--which is due to start a Phase 2 study in 2025--said data from the first trial supported the continued investigation of the drug with studies of longer duration with larger sample sizes and slower dosing.

Write to Helena Smolak at helena.smolak@wsj.com

(END) Dow Jones Newswires

September 12, 2024 05:29 ET (09:29 GMT)

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