MW Wegovy, Zepbound makers' stocks rally as a weight-loss-drug competitor drops out

By Tomi Kilgore

Pfizer to discontinue danuglipron weight-loss drug after a Phase 3 test participant suffered a drug-induced liver injury

Shares of weight-loss drugmakers Novo Nordisk A/S and Eli Lilly and Co. got a nice lift in early Monday trading, after a potential competitor decided to cancel development of its GLP-1 drug.

Pfizer Inc.'s $(PFE)$ development of danuglipron, a glucagon-like peptide-1 (GLP-1) oral drug, had progressed to the point of being evaluated in a Phase 3 test, the last phase of testing, which involves humans.

In the Phase 3 test, which included over 1,400 participants, the overall occurrences of liver trouble were in line with other weight-loss drugs that have already been approved. However, Pfizer said there was one "asymptomatic participant" who experienced a potential drug-induced liver injury.

That injury was resolved after the participant stopped taking 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," Pfizer said in a statement.

That was music to the ears of investors in Novo Nordisk, which makes diabetes and obesity treatments Ozempic and Wegovy; and in Eli Lilly, which makes Mounjaro and Zepbound diabetes and obesity drugs.

The U.S.-listed shares of Novo Nordisk $(NVO)$ climbed 2.7% in premarket trading, while Lilly's stock $(LLY)$ hiked 1.8%.

Those stocks have been hurt recently as President Donald Trump indicated that pharmaceuticals won't be excluded from tariffs. Novo Nordisk is based in Denmark, and while Lilly's headquarters is in Indiana, it operates no less than six manufacturing sites in Europe, which are used to produce its diabetes and obesity treatments.

Read: Why drug stocks are no longer a safe haven from the stock market's turmoil.

Meanwhile, Pfizer shares had initially dropped on the danuglipron news, as much as 3%, but have recovered to be down just 0.1% in recent premarket trading.

"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," said Pfizer Chief Scientific Officer Chris Boshoff.

So far this year, Pfizer shares have dropped 17.4% through Friday, while Novo Nordisk's stock has tumbled 24.8% and Lilly shares have slipped 5.1%. The SPDR S&P Pharmaceuticals ETF XPH has shed 12.4% year to date and the S&P 500 index SPX has declined 8.8%.

-Tomi Kilgore

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April 14, 2025 08:31 ET (12:31 GMT)

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