Structure shares sink as obesity pill misses expectations in small study

An experimental obesity pill being developed by Structure Therapeutics helped lower the blood sugar levels of people with Type 2 diabetes in a clinical trial, but didn’t match the degree of weight loss observed in testing of a rival medicine.

The results disclosed Monday show that Type 2 diabetics treated with Structure’s drug in a Phase 2 trial had a statistically significant 1% reduction in blood glucose after three months of treatment, compared to placebo recipients. No serious adverse events were reported among drug recipients and only one patient on Structure’s medicine dropping out of the trial. The majority of side effects were mild to moderate, according to the company.

The results show the drug, known as GSBR-1290, “has the potential to be a best-in-class compound and a backbone” for drug regimens aimed at “large cardiometabolic [diseases],” Structure founder and CEO Raymond Stevens, said in a statement.

Yet shares of the closely watched biotechnology company lost more than half of their value on Monday, as the weight loss associated with treatment fell short of analyst expectations.

Structure’s medicine is one of several being developed for weight loss, which has quickly become one of the most competitive and lucrative areas of drug research. The company raised $161 million in an initial public offering in February to back its work and, until Monday, had seen its shares nearly quadruple in value — a rare occurrence during a sector-wide pullback.

The interest in Structure stems from its focus. Like other in-demand drugs on the market for weight loss, such as Eli Lilly’s Zepbound and Novo Nordisk’s Wegovy, Structure’s medicine acts on insulin-secreting hormones. But the drug is taken orally, rather than by injection. It’s chasing more advanced weight loss pills being developed by Lilly and Novo, among others, however.

Structure disclosed data from a tiny Phase 1 trial in September. The study results released Monday offer a more substantive look at its potential. The trial has so far enrolled 94 participants, with 60 randomized to receive either a low or high dose of the treatment and the rest receiving a placebo. Fifty-four people were obese and had Type 2 diabetes, while the other 40 weren’t diabetic.

As an early trial, the study is mainly designed to evaluate safety. But analysts and investors have been tracking the study’s other goals, which test its impact on weight loss and blood sugar levels.

Structure noted that drug recipients on a low and high dose lost about 3% more of their body weight than those who got a placebo over the course of three months. The results were better among people without diabetes, who lost about 5% more of their body weight than those on placebo after eight weeks of treatment. Study volunteers also continued to lose weight over the course of the evaluation period, suggesting the benefits could grow with time, according to Structure.

Still, the weight loss figure fell short of what’s been reported for a similar medication from Eli Lilly. That drug, oforglipron, produced weight-loss effects comparable to injectable treatments and, in a similar type of Phase 2 trial, helped patients lose between 5% and 6% of their weight after 12 weeks.

In a note previewing the results, Jefferies analyst Roger Song characterized less than 5% weight loss for Structure as a “work in progress” and likely to trigger a stock selloff. The weight loss findings are “below our expectations,” added Leerink Partners analyst David Risinger in a note on Monday.

Structure is currently adding another 24 non-diabetic volunteers to the study, and expects full results from that group in the first half of next year. Two more mid-stage trials are expected to begin next year as well, according to the company.

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