Eli Lilly's Obesity Drug Beats Rivals Head-to-Head – Cramer Expects Shares to Rise Next
New study data has confirmed Club holds Eli Lilly's top spot in the hotly contested obesity drug race. The news: Eli Lilly's obesity drug Zepbound defeated its main rival Wegovy – made by Denmark's Novo Nordisk – in its first trial against the fast-growing weight-loss drugs. Patients who took Zepound lost an average of 20.2% of their body weight after 72 weeks of taking the drug, compared to 13.7% for those who took Wegovy, Eli Lilly said in a news release Wednesday. Additionally, nearly 32% of people who took 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% to around $833 apiece on Wednesday. Novo Nordisk rose about half a percent. Big Picture Zepbound and Wegovy are part of the booming class of obesity drugs known as GLP-1, which some on Wall Street expect to be worth at least $100 billion by the end of the decade. Originally used to treat type 2 diabetes, its weight loss capabilities have captivated the public and Wall Street alike in recent years, driving shares of Eli Lilly and Novo Nordisk to extraordinary heights. Lilly, in particular, rode the GLP-1 wave and became the world's most valuable healthcare company at nearly $800 billion. The drugs mimic the naturally occurring hormone GLP-1 to regulate blood sugar and suppress appetite, leading to weight loss. Zepbound's active ingredient tirzepatide also targets a second hormone, abbreviated GIP, which is believed to offer efficacy advantages over Wegovy. Both medications are once-weekly injections. In fact, the results released Wednesday by Eli Lilly aren't necessarily a surprise given existing clinical trial data looking at both drugs in isolation. However, given the caveats involved when comparing the results of independent studies, it's worth officially seeing how Zepbound and Wegovy fared in a head-to-head comparison. The peer-reviewed results will be published next year. “We expect HTH (head-to-head) clinical trial results to help drive Zepbound's market share gains relative to Wegovy,” Leerink analysts wrote in a note to clients on Wednesday. Analysts added that they wanted to see what the tolerability of both drugs looked like – something was missing from Lilly's press release. Novo Nordisk was first to market, with Wegovy receiving Food and Drug Administration approval in 2021 to treat obesity. Its sister drug Ozempic, which shares an active ingredient called semaglutide with Wegovy, was approved in 2017 for the treatment of type 2 diabetes. Ozempic is probably the most well-known GLP-1 drug and some people take it for weight loss. The FDA approved Zepbound in November 2023. Lilly's Mounjaro, whose active ingredient is tirzepatide, was approved in May 2022 for the treatment of type 2 diabetes. The success achieved by Novo Nordisk and Eli Lilly in the GLP-1 market has sparked a fierce race in the pharmaceutical industry to discover the next hit obesity drug. Novo and Lilly are aggressively defending their turf and investing billions of dollars to expand the manufacturing capacity needed to meet current demand while advancing clinical trials for next-generation treatments. Investors expect a major update on Novo's next-generation CagriSema by the end of the year and believe it could result in weight loss of more than 25% in late-stage trials. The drug combines a compound called cagrilintide with semaglutide. The lead product in Eli Lilly's pipeline is retatrutide, which resulted in an average weight loss of 24% in a 48-week midstage study published last summer. A phase 3 study is underway. Bottom line: We did even better with our decision to add to our position in Eli Lilly last week – shortly thereafter, we received the very important news that the Biden administration has proposed changes that would extend GLP-1 insurance coverage to millions of Americans with Medicare treatment and Medicaid, which currently have no access. We now have experimental results that show that, as we have long suspected, Zepbound is superior to Wegovy. Eli Lilly shares were sold last month amid concerns over President-elect Donald Trump's appointment of drug industry critic Robert F. Kennedy Jr. as the top U.S. health official. However, the stock is now up more than 14% since closing at about $727 apiece on November 18th. Our trading restrictions prevented us from adding to our position that day, although we still communicated our desire to members. LLY YTD Berg Eli Lilly YTD “I think [Lilly stock] should return to the $900 level,” Jim Cramer said at the morning session on Wednesday. “I think the only deciding factor is…do it.” [Lilly CEO] Does Dave Ricks have the capacity to meet demand? That's really the problem.” Since their launch, both Zepbound and Mounjaro have spent a significant amount of time on the FDA's drug shortage list. However, as of Wednesday, the FDA says the shortages have been resolved. Lilly executives said in the late October the company announced it plans to expand drug manufacturing capacity even further in 2025. (Jim Cramer's Charitable Trust is long-LLY. See a full list of stocks here.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim purchases a stock in his charitable trust's portfolio after sending a trade alert or sold If he issues the stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. 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A sign with the company logo stands in front of the Eli Lilly and Company headquarters campus in Indianapolis, Indiana, on March 17, 2024.
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New study data has solidified the club's position Eli Lillyis the pole position in the highly competitive race for obesity drugs.
