Eli Lilly (LLY) bolstered its position in the budding weight-loss drug market after new data showed its oral obesity pill was highly effective in a mid-stage study. Eli Lilly shares are taking a breather Monday, but we see no reason to join the sellers. Our long-term faith in the Club holding is firmly intact, as the pharmaceuticals giant once again shored up confidence in its quality drug pipeline. People who took the highest dose of Lilly’s orforglipron lost nearly 15% of their body weight, on average, after 36 weeks, according to results published Friday in the New England Journal of Medicine . That compares with 2.3% weight loss for the placebo trial group. The phase-2 study enrolled 272 people who were obese, or overweight with a weight-related health condition. Eli Lilly funded the trial. Orforglipron belongs to the same class of drugs — known as GLP-1s — as Eli Lilly’s Mounjaro and riva l Novo Nordisk ‘s (NVO) Wegovy. Mounjaro currently has regulatory approval in the U.S. to treat type-2 diabetes but is awaiting clearance to be used as an anti-obesity medication. The U.S. Food and Drug Administration approved Wegovy, which is marketed for diabetes under the name Ozempic, for weight loss in 2021 . Both Wegovy and Mounjaro are injectable drugs. Jim Cramer has said Mounjaro could become the best-selling drug of all time . The class of drugs mimics a hormone in the gut that, when released, reduces appetite. Drugmakers believe that oral GLP-1 drugs could potentially expand the weight-loss market , even if they are slightly less effective than the injectable versions. LLY .SPX YTD mountain Eli Lilly’s stock performance so far in 2023 compared with the S & P 500. Novo Nordisk on Sunday released its own trial results for an oral GLP-1 drug, Rybelsus, which helped late-stage study participants lose about 15% of their body weight over 68 weeks. Novo Nordisk is further along in its development of Rybelsus for weight loss than Lilly’s orforglipron, and likely can submit data to U.S. regulators later this year. Eli Lilly, on the other hand, is just starting its large phase-3 studies, meaning it’ll take a few years before orforglipron could hit the market. Bank of America analyst Geoff Meacham told CNBC on Monday that 2026 is a “reasonable” expectation, assuming late-stage studies go well. Despite the differing timelines, Meacham and other analysts who cover Eli Lilly expressed confidence in the competitiveness of orforglipron, which achieved similar weight-loss results to Rybelsus in a shorter trial period. “It’s not a zero-sum game,” Meacham said. Analysts at UBS described orforglipron as “best-in-class,” noting that its safety profile is also “highly competitive” to Rybelsus in similar mid-stage studies. Overall, the analysts wrote in a note, orforglipron implies “dominant positioning for LLY in yet another subsector of diabetes/obesity.” Orforglipron also doesn’t have food-and-water restrictions around taking it, which is a difference compared with Rybelsus and potentially a “big driver” of market share for Lilly down the road, Meacham explained. Patients who currently take Rybelsus for type-2 diabetes are instructed to do so on an empty stomach when they first wake up. Bottom line It will be some time before orforglipron can hit the U.S. market for weight loss and type-2 diabetes. But the most-important takeaway Monday is that Eli Lilly has once again shown the quality of its drug pipeline, particularly in obesity and diabetes, which we have long believed sets the company up for durable growth in the years ahead. It’s a key reason why the stock deserves a premium to the industry, and why we’ve patiently owned it since 2021. We currently have a 2-rating on the stock, meaning we recommend waiting for a pullback before buying more shares. Eli Lilly stock is down about 1.3% Monday afternoon, likely on some profit-taking following a solid move up last week. Additionally, Pfizer ‘s (PFE) more-than-3% decline Monday appears to be weighing on the broader health-care sector. Pfizer’s decline comes after the company ended development for one of its oral obesity-and- diabetes drugs , citing safety concerns. (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. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Eli Lilly (LLY) bolstered its position in the budding weight-loss drug market after new data showed its oral obesity pill was highly effective in a mid-stage study.
Eli Lilly shares are taking a breather Monday, but we see no reason to join the sellers. Our long-term faith in the Club holding is firmly intact, as the pharmaceuticals giant once again shored up confidence in its quality drug pipeline.
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