Analysts are largely optimistic a few recent class of anti-obesity medications following a landmark study released over the weekend. Novo Nordisk ‘s Select study of about 17,500 people found using its Wegovy decreased the danger of great cardiovascular complications akin to heart attacks. The study, which was shared on the American Heart Association conference over the weekend, was closely watched by analysts as a possible catalyst in what has turn out to be one in every of the most important investing and health trends of the yr. The “SELECT trial positions Wegovy in a sweet-spot to forestall diabetes, cardiovascular and kidney disease,” said Morgan Stanley analyst Mark Purcell. “We consider these data will support broader payer adoption and partly mitigate Wegovy competitor pressure.” The study found not only that the drug reduced the danger of a heart attack or stroke, but there was also a 19% drop in all causes of death. That was particularly well received by cardiologists despite being nominally significant, in line with Richard Vosser of JPMorgan. Other data points of note included finding a 72% reduction in patients having diabetes as a consequence of their weight and a 22% drop in kidney disease progressing. A part of the hope coming out of the study is that Wegovy and similar drugs will gain wider approval from medical insurance providers and doctors for weight reduction use, as opposed to only a treatment for diabetes. “Based on our weekend discussions, cardiologist/nephrologist’s willingness to embrace GLP-1 within the treatment of their non-diabetic patients is about to extend markedly,” said Citi analyst Peter Verdult said, adding that the outlook for Wegovy and other GLP-1 drugs was now “supercharged.” Wegovy incorporates semaglutide, the identical lively ingredient in Novo’s type 2 diabetes drug Ozempic. The drug mimics the gut hormone glucagon-like peptide-1, or GLP-1. Eli Lilly has its own drug on this class generally known as tirzepatide, which is sold as Mounjaro for type 2 diabetes and Zepbound for weight reduction. Lilly’s version targets each GLP-1 and a second hormone, glucose-dependent insulinotropic polypetide, or GIP. Despite the positive response to the Select data, U.S. shares of Novo Nordisk saw muted trading on Monday. That might be as a consequence of the proven fact that the stock has already seen a robust yr and since many expected excellent news heading into the information release. In total, the stock is up greater than 45% compared with the beginning of 2023. Many analysts kept their expectations the identical for the international shares following the study. While the everyday analyst has a buy rating on the U.S. stock, the typical upside implies nearly 3% more to realize after the strong rally already seen, in line with LSEG. A rising tide for Eli Lilly? Though the study was specifically about Wegovy, Wall Street sees a positive readthrough for similar medications from other providers, particularly Eli Lilly ‘s Zepbound. Eli Lilly’s shares are in an analogous boat. After surging greater than 65% in 2023, the typical analyst has a buy rating but sees further upside of lower than 4%, per LSEG. Still, analysts said the study has positive reverberations for Zepbound, which was officially approved for weight reduction by federal regulators just last week. “We see only upside for Lilly after this weekend’s long-awaited presentation of the SELECT data,” said Citi analyst Andrew Baum. Similarly, UBS analyst Trung Huynh called the weekend data a “best-case” scenario for Eli Lilly. That is partly since it showed a robust profit for using the drug class for treating obesity. But it surely’s also since the study left areas for improvement that Eli Lilly can move the needle on when Zepbound has outcomes trial data in 2027. One pain point employers and other health-care payers may deal with is the proven fact that the patients from North American enrolled within the trial showed fewer advantages than other cohorts studied, Huynh said. While that will also be a challenge for Zepbound, Lilly’s drug has a less expensive price tag, which might be an incremental positive for getting more employers to incorporate the drug in health-care plans, thus improving market share, he said. Zepbound also has shown greater weight reduction compared with Wegovy in clinical trials. Before the 2027 data, investors can look ahead to data on heart and renal impacts due over the subsequent two years, Huynh said. And the positive outcomes for each within the Wegovy study will be viewed as encouraging for the way Zepbound should perform, the analyst added. ‘Cold water’ To make certain, not everyone seems to be equally optimistic. Investors were buying diabetes care stocks Insulet and Tandem Diabetes Care after the information got here in keeping with what was expected. Those two stocks together with other within the medical device space have being selling off in recent months as investors thought the advantages of GLP-1 drugs would hurt the device stocks’ market share. Citi’s Baum said that the study should help speed up approval for Medicare coverage of the drugs for obese patients. But Deutsche Bank analyst James Shin is not so sure. Shin pointed to the proven fact that the expected avenue for Novo Nordisk to secure Medicare coverage may not go as planned. And he said uptake by cardiologists should be glacial given historical trends, even with the brand new data in hand. “Novo’s comments from its AHA event suggest Semaglutide roundabout by means of securing Medicare coverage via CVD might not be on the cards and should pour some cold water on the GLP-1 space,” he said. “Moreover, cardiologists we have spoken with cautioned that GLP-1 uptake by cardiologists could also be slow given the fields poor track record of adopting other cardioprotective treatments.” — CNBC’s Michael Bloom, Christina Cheddar Berk and Angelica Peebles contributed to this report
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