Some Eli Lilly investors appear concerned about clinical trial data that showed patients regained weight after they stopped taking the corporate’s obesity drug Zepbound. The situation seems fairly clear-cut to us: It’s no reason to sell. Eli Lilly shares on Tuesday shook off afternoon losses to shut higher by 0.12%, at $584.76 each — a day after the stock’s 2.34% slide as Wall Street initially digested the study results published within the Journal of the American Medical Association. Within the trial, obese patients who stopped taking Zepbound after nine months ended up regaining about half of what they lost over the subsequent 12 months. Against this, those that stayed on the drug for one more 52 weeks saw a further 5.5% weight reduction. “The news … was actually something that was positive, and it was viewed as a negative,” Jim Cramer said Tuesday. “That is considered one of those drugs that you have got no alternative” but to remain on it for the long haul, argued Jim, who has long expected the energetic ingredient in Zepbound to turn out to be the best-selling drug of all time. That energetic ingredient, often called tirzepatide, can be behind Eli Lilly’s Mounjaro, which is marketed for type-2 diabetes patients and was approved by U.S. regulators in 2022. Zepbound was cleared in November and hit shelves at U.S. pharmacies last week. The 2 treatments belong to a fast-growing class of medication often called GLP-1s, which mimic a gut hormone to assist control blood sugar and effectively suppress appetite, helping contribute to weight reduction. Eli Lilly and Novo Nordisk , which markets Ozempic for diabetes and Wegovy for weight reduction, are the dominant industrial GLP-1 players immediately, though many other pharmaceutical firms including AstraZeneca are scrambling for a bit of a market that some analysts see eventually surpassing $100 billion in annual revenue . The market response to Monday’s trial data is somewhat surprising because, over the past 12 months on earnings calls and at industry conferences, Eli Lilly executives have routinely said they consider weight-loss patients would wish long-term treatment with a purpose to keep the kilos off. Indeed, the study results support management’s argument that chronic treatment of obesity is needed, BMO Capital Markets analysts said in a note to clients. LLY YTD mountain Eli Lilly’s year-to-date stock performance. To be certain, some investors can have been looking for any reason to ring the register on Eli Lilly, which entered Monday’s session up greater than 63% in 2023 totally on weight-loss drug optimism, dramatically outperforming the S & P 500 . The broader rotation recently out of this 12 months’s standout winners, especially the Magnificent Seven tech stocks, also can have ensnared Eli Lilly on Monday. It’s hard to criticize profit-takers usually— in spite of everything, we did the identical thing with Lilly in September. But on the query of fundamentals, nothing in Monday’s trial data has us reevaluating our thesis on the Indianapolis-based drugmaker. Eli Lilly continues to be poised for multiple years of above-industry growth due, largely, to the large GLP-1 opportunity that is still in early innings. Each Eli Lilly and Novo Nordisk have struggled to maintain up with fervent demand and are investing heavily to construct additional manufacturing capability. Alleviating supply constraints is sweet news for revenue. Investors, including us on the Club, proceed to watch whether more health insurers will provide reimbursement coverage GLP-1s, particularly for obesity, which can help more people afford to take the pricey drugs. Insurers have been wary of their price tags — Zepbound’s list price is about $1,060 a month, while Novo Nordisk’s Wegovy for obesity is $1,349. Some insurers have recently restricted access to GLP-1s for type-2 diabetes out of concern that patients are using them off-label for weight reduction, Reuters reported Tuesday . But over time, our expectation is that coverage for GLP-1s will improve as evidence grows about their additional health advantages. A recent Novo Nordisk study, for instance, showed obesity patients on Wegovy had a 20% lower risk for major cardiovascular events , reminiscent of heart attacks and strokes, compared with participants who took a placebo. (Jim Cramer’s Charitable Trust is long LLY. 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David Ricks, CEO, Eli Lilly
Scott Mlyn | CNBC
Some Eli Lilly investors appear concerned about clinical trial data that showed patients regained weight after they stopped taking the corporate’s obesity drug Zepbound. The situation seems fairly clear-cut to us: It’s no reason to sell.
