AstraZeneca AZN is the latest entrant in the market for obesity and weight management drugs in the United States.
On Nov 9, AstraZeneca announced an exclusive new deal with Chinese private biotech Eccogene to develop the latter’s oral glucagon-like peptide 1 receptor agonist (GLP-1 RA), ECC5004, for treating obesity, type-II diabetes and other cardiometabolic conditions. With the deal, AstraZeneca will get exclusive global development and commercialization rights to this once-daily, low-dose, orally available small molecule GLP-1RA in all territories except China.
In China, Eccogene and AstraZeneca have joint rights. ECC5004 has shown a differentiating clinical profile and encouraging glucose and body weight reduction in a phase I study compared to placebo. AstraZeneca plans to develop ECC5004 both as monotherapy and combination therapies.
AstraZeneca will pay Eccogene $185 million upfront and up to $1.825 billion in potential milestone payments.
Year to date, the stock has decreased 5.5% against the industry’s 5.5% rise.
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The only FDA-approved obesity medication available in the market so far was Novo Nordisk’s NVO Wegovy. Eli Lilly’s LLY Mounjaro (tirzepatide),a dual GIP and GLP-1 receptor agonist (GIP/GLP-1 RA), which was already approved for diabetes, recently became the second drug to be approved for treating obesity. Earlier this week, the FDA approved Mounjaro for the obesity indication in the United States. Mounjaro will be marketed by the name of Zepbound for chronic weight management and is expected to be launched in the United States in the coming weeks. Zepbound is priced around 20% lower than Wegovy.
Both Wegovy and Zepbound are also GLP-1RA therapies, a very important class of drugs for multiple cardiometabolic diseases. They work by mimicking the hormone GLP-1, resulting in weight loss, lowering hemoglobin A1c (HbA1c) and reducing cardiovascular risk. However, Wegovy and Zepbound are injectable therapies. No oral medicines are presently approved for obesity.
According to the World Health Organization, over one billion people worldwide are obese. Obese people have a body mass index (BMI) above 30, while a BMI between 25 and 30 is considered overweight. Obesity has become a global health problem as it can cause other diseases like heart disease, diabetes and stroke. This resulted in an exponential increase in demand for obesity medicines. Also, social media has somewhat hyped the benefits of these medications.
According to a Morgan Stanley report, the market for obesity drugs could reach $77 billion by 2030. Though supply issues may affect sales growth of these drugs in the near term, with the obesity market gaining popularity, analysts expect sales to increase. Pharma companies are rushing to enter the market.
Pfizer PFE also has candidates for obesity in its pipeline, even though it is behind competition. Pfizer is currently evaluating its oral, small molecule GLP-1-RA candidate danuglipron in a phase II study in patients with obesity and type II diabetes. Data from the phase II study is expected by the end of the year. If this study is successful, it will enable Pfizer to finalize the phase III plan.
Zacks Rank
Currently, AstraZeneca has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AstraZeneca PLC Price and Consensus
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