The promise of Eli Lilly's sleep apnea weight reduction treatment is one more reason to say so
Eli Lilly's weight-loss drug Zepbound showed promise for treating sleep apnea — giving investors more confidence to continue owning the world's most valuable health care company even after it squeezed the S&P 500's performance over the past three years had. Study results released Wednesday by Eli Lilly underscore the range of health benefits that drugs like Lilly's Zepbound and Mounjaro — known as GLP-1 — can have beyond their increasingly popular uses in treating obesity and type 2 diabetes. Lilly is also studying GLP-1 to reduce the risk of cardiovascular events such as heart attacks and strokes, as well as a type of fatty liver disease. Lilly's main competitor in the category, Novo Nordisk, recently received US approval to market its obesity drug Wegovy as a treatment for heart disease in obese patients. Novo Nordisk was the first to bring to market the GLP-1 products Wegovy and Ozempic for diabetes. Although Ozempic is a diabetes drug, it has become the public face of this emerging class of drugs that also results in significant weight loss. Eli Lilly said it plans to ask U.S. regulators later this year to expand Zepbound's labeling to include obstructive sleep apnea (OSA). OSA is one of the three most common types of sleep apnea, according to the Mayo Clini c. Approval for this indication could help strengthen insurance reimbursement for Zepbound and further demonstrate that weight loss can provide more than just cosmetic health improvements. Insurance coverage for Zepbound has been paltry since its launch in the U.S. market late last year, due in large part to its cost: its monthly list price is $1,060. “I think some of these numbers need to be taken note of by the insurance companies,” Jim Cramer said on CNBC on Wednesday. The active ingredient behind Zepbound and Mounjaro – known as tirzepatide – is central to our investment thesis in Eli Lilly. Jim has long said that tirzepatide could become the best-selling drug of all time because of its ability to treat obesity and other diseases. It was first approved for the treatment of type 2 diabetes in May 2022 under the brand Mounjaro. Shares of Eli Lilly have taken the GLP-1 craze to new heights in recent years. On March 4, the stock hit a record $800.78 per share, with a market cap of over $750 billion. LLY YTD Berg Eli Lilly YTD The obstructive sleep apnea data could open the door for Medicare to cover Zepbound for the condition, Morgan Stanley analysts said in a note to clients on Wednesday. Medicare prescription drug plans, known as Part D, currently only cover obesity medications. Last month, the U.S. government agency that administers the seniors' health program allowed coverage for Novo's Wegovy because the drug is prescribed to reduce the risk of heart attacks and strokes. According to the Cleveland Clinic, obstructive sleep apnea is characterized by airway blockages that cause people to repeatedly stop breathing during sleep and experience low oxygen levels in the blood, causing them to wake up and start breathing again. This affects their ability to get quality sleep – and over time can lead to other health complications such as daytime sleepiness, heart damage and even sudden death. According to the National Council on Aging, obesity can contribute to the development of OSA, which is estimated to affect approximately 39 million adults in the United States. The current standard of care for obstructive sleep apnea is positive airway pressure (PAP) devices, which help keep the patient's airway open during sleep. Eli Lilly released preliminary data from two late-stage studies on Wednesday, both of which showed that obese patients with moderate to severe obstructive sleep apnea saw improvements in their OSA over the course of a 52-week study. In one study, patients taking only Zepbound experienced an average of 27.4 fewer times of restricted or completely blocked airflow per hour of sleep. The placebo patients only experienced a reduction of 4.8 incidents per hour on average. In a second study, OSA patients who took Zepbound and used a PAP machine experienced an average of 30.4 fewer events per hour, compared to six fewer in the placebo group. The results, which have yet to undergo peer review, met Wall Street's threshold to be considered a success, Deutsche Bank analysts said in a note on Wednesday. Eli Lilly will present full data at an American Diabetes Association conference in late June. The popularity of GLP-1 has skyrocketed in recent years. They mimic a hormone in the gut to improve blood sugar control, effectively suppressing appetite and thus leading to weight loss. The active ingredient in Novo Nordisk's Ozempic and Wegovy, semaglutide, works in a similar way to Lilly's tirzepatide. The key difference: Lilly's active ingredient targets a second hormone called GIP, which is thought to increase its effectiveness. LLY NVO Berg 2021-05-09 Eli Lilly vs. Novo Nordisk The stocks of both companies were on fire. Eli Lilly has gained nearly 300% over the past three years, including a 28% gain year-to-date. Shares of Novo Nordisk are up around 243% over the past three years and up 19.5% so far in 2024. At the same time, these gains have wiped out the performance of the S&P 500 and the healthcare sector index. The companies currently have a duopoly in the GLP-1 market, which some Wall Street analysts estimate could be worth $100 billion by the end of the decade. Despite the promise of treating other diseases, diabetes and obesity may still account for the lion's share of GLP-1 sales. In a note to clients last month, Bank of America raised its 2030 sales forecast for tirzepatide to about $62 billion, including $54 billion for diabetes and obesity. Analysts forecast obstructive sleep apnea sales of $3 billion. (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 makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable foundation's portfolio. If Jim discussed a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE INVESTING CLUB INFORMATION SET FORTH ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, ALONG WITH OUR DISCLAIMER. THERE ARE NO fiduciary duty or duty IN RECEIVING YOUR INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
An injection pen of Zepbound, Eli Lilly's weight loss drug, is on display in New York City on December 11, 2023.
Brendan Mcdermid | Reuters
Eli LillyZepbound, the weight-loss drug, showed promise for treating sleep apnea — giving investors more confidence to continue owning the world's most valuable healthcare company even after it dragged down the S&P 500's performance over the past three years .
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