Merck stock wavered Tuesday after the pharma giant unveiled new data for a potential competitor to weight-loss drugs from Novo Nordisk and Eli Lilly.
Merck tested its drug, dubbed efinopegdutide, in patients with a progressive liver disease known as nonalcoholic steatohepatitis, or NASH. The study compared efinopegdutide with Novo's oral semaglutide. Efinopegdutide, semaglutide and Lilly's tirzepatide all target a gut hormone known as glucagon-like peptide-1, or GLP-1, to help slow how fast the stomach empties itself.
Over 24 weeks, patients who received efinopegdutide lost 8.5% of their body weight, compared with a 7.1% loss for the semaglutide group. But there's a key caveat to Merck's study, Evercore ISI analyst Umer Raffat said. Merck compared efinopegdutide with a low, 1-milligram dose of semaglutide. Higher doses of semaglutide generally lead to bigger weight loss.
"Thus, the real winner out of Merck's NASH update may remain the big incumbents, Lilly and Novo," he said in a report.
On the stock market today, Merck stock alternated between gains and losses. Shares closed up 0.1% at 109.99.
Merck Stock: A Competitor Among Weight Loss Drugs?
There are key differences between Merck's medicine and the weight-loss drugs from Novo and Lilly.
Novo sells injectable semaglutide as Wegovy for obesity treatment and as Ozempic for diabetes. It also has an oral version called Rybelsus for diabetes, and is testing a lower 2.4-milligram oral dose.
Semaglutide only impacts GLP-1, while Lilly's tirzepatide also targets a gut hormone called glucose-dependent insulinotropic polypeptide, or GIP. Tirzepatide sells as an injection called Mounjaro for diabetes treatment and is under consideration as a contender among weight-loss drugs.
Merck's oral drug, efinopegdutide, loops in another hormone. In addition to GLP-1, efinopegdutide activates glucagon receptors to increase energy expenditure and reduce food intake. Further, Merck isn't specifically testing efinopegdutide in obesity treatment.
Merck licensed efinopegdutide from Hanmi Pharmaceutical, which doesn't trade in the U.S. Johnson & Johnson had a deal with Hanmi and tested efinopegdutide in obesity treatment. Bearishly for Merck stock now, efinopegdutide had no impact on blood glucose in those earlier tests.
In this study, Merck screened out patients with high blood-glucose levels. It also had to slowly increase the dosage to prevent the same nausea and vomiting reported by patients in the J&J studies.
GLP-1 In NASH, Obesity Treatment
Evercore's Raffat kept his outperform rating on Merck stock. But he doesn't expect this potential competitor among weight-loss drugs to take any meaningful share.
"Merck data does validate the role of GLP-1s in NASH setting," he said.
Raffat noted that Lilly is testing Mounjaro in patients with NASH and expects to have the results in early 2024. Further, the company has a next-generation version that targets three hormones — GLP-1, GIP and glucagon receptors — that could lead the class in terms of weight loss.
Merck stock is currently forming a flat base with a buy point at 119.65, according to MarketSmith.com. Meanwhile, Lilly shares are approaching a profit-taking zone after breaking out of a cup base in April. Novo stock is also forming a flat base with an entry at 172.97.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
