Next frontier in anti-obesity landscape: oral GLP-1s with potential OTC switch

The race to develop oral obesity drugs is heating up. Eli Lilly (LLY) and Novo Nordisk (NVO), makers of the highly popular injectable GLP-1 class of weight loss drugs, as well as potential new entrants Pfizer (PFE) and Roche (OTCQX:RHHBY), are all in the fray.

Shortcomings of injectables have made oral GLP-1s a hotly pursued goal in the anti-obesity space. However, Oppenheimer went a step further, arguing in a research note on Wednesday that a potential switch to their over-the-counter status would be an added advantage.

“In an intensely competitive obesity landscape, Rx to OTC could be a highly differentiated, valuable life-cycle management strategy to preserve substantial brand equity well beyond patent expiry,” Oppenheimer analyst Jay Olson argued.

His comments followed a selloff in Novo Nordisk (NVO) shares on Friday after the Danish drugmaker said its cannabinoid receptor-targeting obesity pill raised concerns over neuropsychiatric side effects in a mid-stage study.

However, Olson rules out safety concerns for GLP-1s and predicts a future Rx-to-OTC switch for an oral GLP-1, attributing the current black box warning approved for the drug class to pancreatitis linked to first-generation GLP-1s such as exenatide but not newer GLP-1s.

Oppenheimer pointed to Viking Therapeutics (VKTX) oral weight loss candidate VK2735 as the best-positioned candidate to receive the Rx-to-OTC switch. The dual agonist of gut hormone receptors GLP-1 and GIP is set for an early-stage readout at Obesity Week in early November.

“We believe oral VK2735 is a potential candidate for OTC status based on existing clinical data and look forward to Obesity Week updates,” Olson wrote with an Outperform recommendation and a 12-18 month target of $138 per share.