Kailera's big obesity reveal puts pressure on shares

Fresh from a record-breaking IPO, Kailera Therapeutics revealed keenly anticipated clinical trial results for its oral weight-loss drug, which prompted a 10% fall-off in its share price.

Around half of that decline has since been recouped, but the sell-off seems to have been stimulated by tolerability data with the GLP-1 agonist, KAI-7535, in a phase 3 trial conducted in China.

From an efficacy perspective, KAI-7535, which was originally developed by China's Hengrui Pharma and also known as HRS-7535, achieved weight loss of 11.1% after 50 weeks in the HARBOR-1 trial. That puts it in the same ballpark for efficacy as Novo Nordisk's Wegovy (semaglutide) pill and Eli Lilly's Foundayo (orforglipron).

However, investors seem to have been concerned by fairly high rates of gastrointestinal side effects, specifically nausea, vomiting, and diarrhoea, that are common to all GLP-1 agonist therapies.

Nausea and vomiting were reported in about 70% and more than 65% ‌of ⁠patients receiving HRS-7535, respectively, compared with 16.2% and 4.5% in the placebo group, which led some to question its competitive profile unless tweaks to the starting dose and titration schedule can reduce the rates.

Hengrui and Kailera have been vocal about positioning the drug as being capable of improving the clinical profile of existing oral treatments for obesity. On the plus side for safety, there was no evidence of any liver toxicity with the GLP-1 agonist, which has been an issue with some other drugs in the class.

In a second, phase 2b study in Chinese people living with type 2 diabetes, OUTSTAND-2, HRS-7535 lowered levels of a marker for blood glucose control (HbA1c) by an average of 1.5% to 1.68%, which proved to be non-inferior to AstraZeneca's SGLT2 inhibitor Farxiga/Forxiga (dapagliflozin).

Kailera – which raked in a massive $625 million from its IPO on the Nasdaq in April – said the Chinese results "highlight the promise" of KAI-7535 as the company runs a phase 2 trial of the drug outside China, with results due in 2027.

Chief medical officer Scott Wassermann acknowledged the safety concerns in a statement, noting that "to optimise KAI-7535's overall clinical profile for the treatment of obesity in diverse patient populations, we are assessing a wide dose range, a lower starting dose, and a more gradual titration" in the ongoing study.

The Waltham, Massachusetts-based biotech is also running a phase 3 trial of lead drug ribupatide, an injectable GLP-1/GIP dual agonist in the same class as Lilly's fast-growing Zepbound (tirzepatide).