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Roche Stock Down on Concerns of Side-Effects From Its Obesity Drug

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Roche (RHHBY - Free Report) presented results of an early-stage study on its experimental obesity drug, CT-996, at the European Association for the Study of Diabetes annual meeting.

CT-996 is an investigational, once-daily, oral small molecule GLP-1 receptor agonist being developed for the treatment of both type 2 diabetes and obesity.

However, shares of the company were down 6% on Sept. 11, post the presentation on concerns of side-effects from the investigational obesity drug.

Year to date, Roche’s shares have gained 3.1% compared with the industry’s 25% growth.

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Roche’s Obesity Drugs Disappoint Investors

As per a report from Reuters, all 25 participants experienced mild or moderate side effects, or adverse events, including those that only received an ineffective placebo. The side effects were mostly gastrointestinal that included nausea, vomiting and diarrhea.

While Roche believes that these side effects can be offset by gradually ramping up the dose of the drug, the most concerning factor is the high number of adverse events.

Per Roche, the frequency of adverse events was "consistent with brisk up-titration and early stage of development.”

According to a previous data released by the company in July, treatment of participants with obesity and without type 2 diabetes using CT-996 resulted in a clinically meaningful placebo-adjusted mean weight loss of 6.1% within four weeks.

In the latest presentation, Roche stated that the headline result of 6.1% weight loss over four weeks was based on the treatment of just six patients.
Hence, this also raises concerns of efficacy.

Earlier in the week, RHHBY’s shares took a beating after the company released data on its other experimental obesity drug CT-388, which also showed side effects, including nausea, vomiting and diarrhoea.

Roche forayed into the obesity market when it acquired privately owned Carmot Therapeutics for $2.7 billion. The acquisition added a differentiated incretin portfolio with three candidates — CT-388, CT-996 and CT-868 — to its pipeline.

Injected subcutaneously once a week, CT-388 is an investigational dual GLP-1/GIP receptor agonist for the treatment of obesity in patients with and without type 2 diabetes. The candidate is currently in phase II.

The disappointing data on both the experimental obesity treatments raise concerns about Roche’s path ahead in the much sought-after obesity market.

Roche’s Place in the Lucrative Obesity Market

Roche is a relatively new player in the obesity market, which is currently one of the most lucrative spaces in the healthcare sector, dominated by bigwigs like Novo Nordisk (NVO - Free Report) and Eli Lilly (LLY - Free Report) . The stupendous success of Novo Nordisk’s obesity drug, Wegovy, puts the spotlight on the obesity space.

The FDA approved Weogovy in 2021 for chronic weight management in obese or overweight adults. Since the approval, sales of the drug have been rising consistently, driven by increased demand.

Eli Lilly’s Zepbound also witnessed a strong uptake, owing to solid demand.

Shares of Novo Nordisk went up 4% on Sept. 11 after reports of its new weight-loss drug, amycretin, outperforming Wegovy in a 12-week study.

Given the significant market potential of obesity, other players are also striving to make the most of this opportunity.

Roche’s Rank

Roche currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

 


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