Pfizer Inc. has announced the discontinuation of its twice-daily oral weight-loss drug, danuglipron, after facing substantial setbacks in its development. The decision came as a result of most patients in an early trial experiencing side effects such as nausea and vomiting, leading to a significant dropout rate. This development marks a major blow to Pfizer's aspirations of entering the rapidly growing obesity treatment market, which analysts project could reach $100 billion by the end of this decade.

In a mid-stage trial, danuglipron demonstrated a potential weight reduction of up to 13% at 32 weeks in adults with obesity, without type 2 diabetes. However, this result was not only below the expectations set by Wall Street but also fell short when compared to Eli Lilly's experimental oral drug, which showed a 15% weight reduction at 36 weeks at a higher dose.

According to Cantor Fitzgerald analyst Louise Chen, the results of danuglipron were underwhelming, particularly in light of the high rates of side effects and the fact that the weight-loss outcomes did not meet the levels required to encourage patients to switch from existing injection treatments.

The announcement led to a 4.8% drop in Pfizer's shares to $29.33 in premarket trading. Despite this setback, Pfizer maintains its focus on a once-daily, modified release version of danuglipron, with further data on this variant expected in the first half of the next year. The company noted that while the common side effects in the twice-daily version were mild, the trial saw discontinuation rates exceeding 50% across all doses, significantly higher than the approximately 40% with placebo.

Evan Seigerman, a BMO analyst, expressed skepticism regarding the potential of the new version of the drug to overcome the existing side-effect profile. He raised the possibility that the high rates of vomiting could have been a contributing factor to the overall weight loss observed in the trial.

Danuglipron is part of a class of treatments that also includes Novo Nordisk's Wegovy and Ozempic, and Eli Lilly's Mounjaro and Zepbound, all of which are currently injectable. While Novo and Lilly are also testing oral versions of their drugs, Pfizer's recent decision is a setback in its race to develop an effective oral obesity treatment.

This development comes at a challenging time for Pfizer, as the company is also grappling with declining revenue from its COVID-19 vaccine and treatment. Pfizer's CEO, Albert Bourla, had high hopes for the obesity pill, predicting it could become a $10-billion-a-year product. However, with shares down more than 40% this year, partly due to the falling sales of its COVID-19 products and concerns about competition for its top-selling drugs, the company faces significant challenges ahead. In October, Pfizer announced a $3.5 billion cost-cutting program, though detailed plans for these cuts are still pending.