Eli Lilly’s weight-loss drug Zepbound has shown promise as a treatment for sleep apnea, giving investors more confidence to continue holding the world’s most valuable healthcare company even after that it has crushed the performance of the S&P 500 over the past three years. The study results released Wednesday by Eli Lilly highlight the range of health benefits that drugs like Lilly’s Zepbound and Mounjaro – known as GLP-1 – may have outside of their growing uses. most popular in the treatment of 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. Lilly’s main rival in this category, Novo Nordisk, recently won U.S. approval to also market its obesity drug, Wegovy, as a treatment for heart disease in overweight patients. Novo Nordisk was the first to market GLP-1 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 cause substantial weight loss. Eli Lilly announced plans to ask U.S. regulators to expand Zepbound’s label to include obstructive sleep apnea, or OSA, later this year. OSA is one of three common types of sleep apnea, according to the Mayo Clinic v. Approval of this indication could help strengthen the case for insurance reimbursement for Zepbound and further illustrate that weight loss can provide more than just cosmetic improvements to health. Zepbound’s insurance coverage has been spotty since it hit the U.S. market late last year, largely because of its cost, with a monthly list price of $1,060. “I think insurance companies are going to have to take into account some of these numbers,” Jim Cramer said Wednesday on CNBC. 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 thanks to its ability to treat obesity and other conditions. It was first approved to treat type 2 diabetes under the brand name Mounjaro in May 2022. Eli Lilly’s actions have taken the GLP-1 craze to new heights in recent years. The stock hit an all-time high of $800.78 per share on March 4, with a market capitalization of more than $750 billion. LLY YTD mountain Eli Lilly YTD Data on obstructive sleep apnea could open the door for Medicare to cover Zepbound for the condition, Morgan Stanley analysts said in a note to clients Wednesday. Medicare prescription drug plans, known as Part D, currently cannot cover only obesity medications. Last month, the U.S. government agency that runs the senior health program authorized coverage of Novo’s Wegovy when the drug is prescribed to reduce the risk of heart attacks and strokes. Obstructive sleep apnea is characterized by airway blockages that cause people to stop breathing repeatedly during sleep and experience low blood oxygen levels, prompting them to wake up to start again to breathe, according to the Cleveland Clinic. This disrupts their ability to get quality sleep, and over time it can lead to other health complications, such as daytime sleepiness, heart damage, and even sudden death. Obesity can contribute to the development of OSA, which is estimated to affect approximately 39 million American adults, according to the National Council on Aging. The current standard of care for obstructive sleep apnea relies on positive airway pressure, or PAP, machines, which help keep patients’ airways open while they sleep. Eli Lilly on Wednesday released preliminary data from two late-stage trials, both of which showed that obese patients with moderate to severe obstructive sleep apnea saw improvements in their OSA during a 52-week trial . In one trial, patients who took Zepbound alone experienced an average of 27.4 fewer incidents of restricted or completely blocked airflow per hour of sleep. Those taking the placebo saw an average reduction of just 4.8 incidents per hour. In a second trial, OSA patients who took Zepbound and used a PAP device experienced an average of 30.4 fewer incidents per hour, compared to six fewer in the placebo group. The results, which still need to be reviewed by peers, met Wall Street’s threshold to be considered a success, Deutsche Bank analysts said in a note Wednesday. Eli Lilly will present comprehensive data at an American Diabetes Association conference in late June. The popularity of GLP-1s has exploded in recent years. They mimic a hormone found in the gut to improve blood sugar control and effectively suppress appetite, thereby leading to weight loss. The active ingredient in Novo Nordisk’s Ozempic and Wegovy, semaglutide, works similarly to Lilly’s tirzepatide. The main difference: Lilly’s compound targets a second hormone, called GIP, which is believed to enhance its effectiveness. LLY NVO mountain 2021-05-09 Eli Lilly vs. Novo Nordisk The shares of both companies caught fire. Eli Lilly has gained nearly 300% over the past three years, including a 28% year-to-date gain. Shares of Novo Nordisk have jumped about 243% over the past three years and 19.5% so far in 2024. Along the way, these gains have blown away the performance of the S&P 500 and the health 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 conditions, the lion’s share of GLP-1 sales will likely come from diabetes and obesity. In a note to clients last month, Bank of America raised its tirzepatide revenue forecast for 2030 to about $62 billion, including $54 billion for diabetes and obesity. Analysts predict $3 billion in sales for obstructive sleep apnea. (Jim Cramer’s Charitable Trust is long LLY. See here for a complete list of stocks.) 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 a trade alert is sent before buying or selling a stock in his charity’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY OBLIGATION EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
An injector pen for Zepbound, Eli Lilly’s weight loss drug, is on display in New York on December 11, 2023.
Brendan McDermid | Reuters
Elie LillyZepbound, ‘s weight-loss drug, has shown promise as a treatment for sleep apnea, giving investors more confidence to continue holding the world’s most valuable healthcare company even after it has crushed the performance of the S&P 500 over the past three years.
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