Why Roche Holdings shares wilted on Wednesday

For the second trading session in less than a week, Roche Holding (RHHBY -6.02%) the stock really took it on the chin on wednesday. The depressing news about its investigational obesity drug was to blame; broadcasting this, investors sold off the pharmaceutical veteran. At the end of the day’s action, Roche had lost almost 6% of its value.

Obesity medicine disappoints

At 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 offer of the Swiss company to compete in the market of drugs with very high potential for weight loss. At the moment it is dominated by a European pharmaceutical company Novo Nordiskit’s Wegovy. A muscular fellow from the US, a recent arrival Eli Lillyit also competes in the segment with Zepbound.

Unfortunately for Roche, the most recent CT-996 study found the drug produced side effects that included nausea, vomiting and diarrhea. In its presentation on Wednesday, the company said these effects could be mitigated by gradually increasing the dose of the drug. Patients in the study who did this were less likely to experience these side effects.

A potential bet of more than $3 billion

Roche acquired CT-388 and another experimental weight-loss treatment when it acquired clinical-stage biotech Carmot Therapeutics in a deal worth up to $3.1 billion that closed in January. While the company has a history dotted with successes, it has recently stumbled in trials for drugs in categories such as Alzheimer’s disease and cancer, so it could greatly benefit from a win in the obesity segment.