Shares of Viking Therapeutics (VKTX) and Structure Therapeutics (GPCR) are on the rise on Monday after Pfizer (PFE) announced its decision to discontinue development of danuglipron, an oral glucagon-like peptide-1 receptor agonist, which was being investigated for chronic weight management. While Morgan Stanley predicts “limited reaction” in Pfizer’s shares following the news, JPMorgan tells investors that the decision is “mostly a positive” for Structure and Viking, both developing drugs in the space. The Fly notes that Novo Nordisk (NVO) and Eli Lilly (LLY) manufacture some of the most popular weight loss drugs currently on the market, namely Ozempic, Wegovy, and Mounjaro.

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DANUGLIPRON DISCONTINUATION: Pfizer announced the decision to discontinue development of danuglipron, an oral glucagon-like peptide-1 receptor agonist, which was being investigated for chronic weight management. Pfizer’s dose-optimization studies of once-daily formulations of danuglipron met key pharmacokinetic objectives and confirmed a formulation and dose with the potential to deliver a competitive efficacy and tolerability profile in Phase 3 testing, based on earlier studies of twice-daily danuglipron. While the overall frequency of liver enzyme elevations across the over 1,400 participant safety database of danuglipron is in-line with approved agents in the class, a single asymptomatic participant in one of the dose-optimization studies experienced potential drug-induced liver injury which resolved after discontinuation of danuglipron. After a review of the totality of information, including all clinical data generated to date for danuglipron and recent input from regulators, Pfizer has decided to discontinue development of the molecule.

“Cardiovascular and metabolic diseases including obesity remain important areas of unmet medical need, and we plan to continue applying our global capabilities to advance a pipeline of investigational treatments that have the potential to fill critical gaps in patient care, including continued development of our oral GIPR antagonist candidate and other earlier obesity programs,” said Chris Boshoff, Chief Scientific Officer and President, Research and Development at Pfizer. “While we are disappointed to discontinue the development of danuglipron, we remain committed to evaluating and advancing promising programs in an effort to bring innovative new medicines to patients.”

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LIMITED REACTION: Commenting on the news, Morgan Stanley says that its sense is that investor expectations for Danu were low. With Pfizer shares trading at a greater than 7% dividend yield, which could offer support for the stock, the firm expects “a limited reaction” in the shares to the discontinuation news. Morgan Stanley keeps an Equal Weight rating and $31 price target on Pfizer shares. The firm also notes that it expects initial Phase 3 data for Eli Lilly’s Orforglipron this quarter representing the next key catalyst for the oral GLP-1 category.

MOSTLY POSITIVE: JPMorgan says Pfizer’s decision to discontinue development of danuglipron, an oral small molecule GLP-1, due to a liver toxicity issue in one patient, is “mostly a positive” for Structure Therapeutics and Viking Therapeutics. Structure is now in line to become the second small molecule oral to enter the market and Viking becomes an “even more attractive partnership candidate,” the firm tells investors in a research note. JPMorgan believes Structure shares could be modestly up, to 5%, as a result of Pfizer’s update.

PRICE ACTION: In Monday morning trading, shares of Pfizer are up modestly at $22.17, while Viking’s shares have jumped about 10% to $24.43 and Structure has rallied almost 11% to $17.77.

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JPMorgan says Pfizer news ‘mostly a positive’ for Structure, Viking Viking, Structure rally after Pfizer halts obesity drug development Morgan Stanley sees ‘limited reaction’ in Pfizer shares to oral GLP-1 scrapping Pfizer’s Danuglipron Discontinuation: Limited Impact on Stock Despite Hold Rating Pfizer Stock (PFE) Dips after Weight-Loss Pill Halted Over Liver Injury

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