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Eli Lilly’s obesity drug beats rival in head-to-head lawsuit – Cramer sees shares moving ahead

On December 5, 2024By Littum

New trial data has cemented that Club holds Eli Lilly’s pole position in the highly competitive race of obesity drugs. The news Eli Lilly’s obesity drug Zepbound beat its biggest rival Wegovy – made by Denmark’s Novo Nordisk – in the first head-to-head trial comparing the fast-growing weight loss treatments. Patients on Zepound lost an average of 20.2% of their body weight after 72 weeks on the drug, compared with 13.7% for those taking Wegovy, Eli Lilly said in a news release Wednesday. Additionally, nearly 32% of people on Zepbound lost at least a quarter of their body weight, compared to 16% on Wegovy, according to the Indianopolis-based drugmaker. Shares of Eli Lilly, a longtime portfolio name, rose more than 2.5% on Wednesday to around $833 apiece. Novo Nordisk ticked higher by around half a percent. Big picture Zepbound and Wegovy belong to the booming class of obesity drugs known as GLP-1s, which some on Wall Street expect will be worth at least $100 billion by the end of the decade. Originally used to treat type-2 diabetes, their weight-loss abilities have captivated both the public and Wall Street in recent years, driving shares of Eli Lilly and Novo Nordisk to extraordinary heights. Lilly, in particular, has ridden the GLP-1 wave to become the most valuable health care company in the world at nearly $800 billion. The drugs mimic the naturally occurring GLP-1 hormone to help regulate blood sugar and suppress appetite, leading to weight loss. Zepbound’s active ingredient tirzepatid also targets another hormone abbreviated as GIP, which is thought to provide efficacy advantages over Wegovy. Both drugs are injections once a week. In fact, the results released Wednesday by Eli Lilly aren’t necessarily a surprise given the existing stack of clinical trial data looking at both drugs in isolation. However, given the necessary caveats when comparing the results of independent trials, there is value in officially seeing how Zepbound and Wegovy fared on a head-to-head basis. Peer-reviewed results will be issued next year. “We expect HTH (head-to-head) clinical trial results to help drive accelerating Zepbound market share relative to Wegovy,” analysts at Leerink wrote in a note to clients on Wednesday. Analysts added that they wanted to see what the tolerability of both drugs looked like — something absent from Lilly’s press release. Novo Nordisk was first to market, with Wegovy receiving Food and Drug Administration approval for obesity in 2021. Its sister drug Ozempic, which shares an active ingredient with Wegovy called semaglutide, was approved for type-2 diabetes treatment in 2017. Ozempic is arguably the most known GLP-1 drug and some people take it for weight loss purposes. The FDA approved Zepbound in November 2023. Lilly’s Mounjaro, which shares tirzepatide as its active ingredient, was approved for type-2 diabetes in May 2022. The success Novo Nordisk and Eli Lilly have found in the GLP-1 market has sparked a fraught race in the pharmaceutical industry to find the next hit obesity drug. Novo and Lilly are aggressively defending their turf, investing billions of dollars to build the manufacturing capacity needed to meet current demand while advancing clinical trials of next-generation treatments. Investors expect a critical update of Novo’s next-generation CagriSema before the end of the year, with expectations that it can deliver more than 25% weight loss in a late trial. The drug combines a compound called cagrilintide with semaglutide. The lead product in Eli Lilly’s pipeline is retatrutide, which generated an average of 24% weight loss in a 48-week mid-stage study released last summer. A phase three trial is underway. Bottom Line We feel even better about our decision to add to our Eli Lilly position last week — shortly after that we got the very important news that the Biden administration proposed changes that would expand coverage for GLP-1s to millions of Americans on Medicare and Medicaid who currently lack access. Now we have trial results showing that Zepbound, as we have long suspected, is superior to Wegovy. Shares in Eli Lilly sold off last month on concerns that President-elect Donald Trump nominated pharmaceutical industry critic Robert F. Kennedy Jr. to be the top US health official. But the stock is now up more than 14% since it closed at approx. $727 each on November 18th. Our trading restrictions prevented us from increasing our position that day, although we still communicated our desire to members. LLY YTD Mountain Eli Lilly YTD “I think (Lilly stock) should return to the $900 level,” Jim Cramer said Wednesday in the morning session. “I think the only entry factor is … does (Lilly CEO) Dave Ricks have the capacity to meet the demand? That’s really the issue.” Since coming to market, both Zepbound and Mounjaro have spent a significant amount of time on the FDA’s drug shortage list. As of Wednesday, however, the FDA says the deficiency has been resolved. Lilly executives said in the company’s earnings call in late October that production capacity for the drugs should expand further in 2025. (Jim Cramer’s Charitable Trust is long LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. 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A sign with the company logo sits outside the headquarters campus of Eli Lilly and Company on March 17, 2024 in Indianapolis, Indiana.

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New trial data has cemented the club’s stock Eli Lilly‘s pole position in the highly competitive race for obesity drugs.