For the second trading session in less than a week, Roche Holding(OTC: RHHBY) stock really took it on the chin Wednesday. Dispiriting news about its investigational obesity drug was the culprit; disseminating this, investors sold out of the pharmaceutical veteran. At the end of the day's action, Roche had lost almost 6% of its value.
Obesity drug disappoints
In a meeting of the European Association for the Study of Diabetes that day, Roche presented the results of an early-stage clinical trial of its CT-996 pill.
This is the Switzerland-based company's bid to compete in the very high-potential weight-loss drug market. At the moment, this is dominated by fellow European pharmaceutical company Novo Nordisk's Wegovy. A more recent arrival, muscular U.S. peer Eli Lilly, is also competing in the segment with its Zepbound.
Unfortunately for Roche, the most recent CT-996 study found that the drug produced side effects that included nausea, vomiting, and diarrhea. In its Wednesday presentation, the company said that these effects could be mitigated by gradually ramping up the dose of the drug. Patients in the study who did so were less likely to suffer those side effects.
A potential $3 billion-plus gamble
Roche acquired CT-388 and another investigational weight-loss treatment when it acquired clinical-stage biotech Carmot Therapeutics in a deal potentially worth as much as $3.1 billion that closed in January. Although the company has a history dotted with successes, recently, it has stumbled in trials for drugs in categories such as Alzheimer's disease and cancer, so it could very much benefit from a win in the obesity segment.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk and Roche Ag. The Motley Fool has a disclosure policy.
