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Seemingly bad news can sometimes be really good news. I think a recent study for Eli Lilly‘s (LLY -0.28%) rival to Novo Nordisk‘s massively successful Ozempic and Wegovy provides a great case in point.
Results from the Surmount-4 clinical trial were published on the Journal of the American Medical Association‘s website on Dec. 11, 2023. Researchers found that patients who took Lilly’s weight loss drug tirzepatide (marketed as Zepbound for weight loss and Mounjaro for type 2 diabetes) regained roughly half of their weight after they stopped taking the drug for one year.
Investors reacted negatively to the news. Lilly’s share price fell around 5% before rebounding somewhat. However, my view is that there’s more to the story that many investors are missing. Here’s why the recent data actually makes Lilly stock an even better buy.
To make my argument, let me first point to a completely opposite scenario that I think is instructive. A decade ago, Gilead Sciences (GILD -1.77%) won U.S. Food and Drug Administration (FDA) approval for Sovaldi. It was the first therapy that effectively cured hepatitis C for many patients.
Over the next few years, Gilead launched even more powerful combination therapies for treating hepatitis C virus (HCV) infection. Harvoni, Epclusa, and Biktarvy — along with Sovaldi — all became blockbusters. Gilead raked in money hand over fist.
Everything went great for Gilead Sciences for a while. But then, the company’s sales began to decline, as did the price of the biotech stock. What happened?
A person who is cured of hep C doesn’t need medications anymore. Gilead began to run out of patients for its HCV drugs.
As I mentioned, this is the opposite scenario than we’re seeing for Eli Lilly and Zepbound. Patients have ample motivation to continue taking Lilly’s drug. If they don’t, they’re likely to regain their lost weight.
This means that Lilly isn’t going to experience the “Gilead effect.” Sales for Zepbound should remain strong as patients continue taking the drug to keep their weight down.
No one should have expected a different outcome, though. Research has also shown that patients who stop taking Novo Nordisk’s Ozempic and Wegovy regain weight. In addition, Lilly Chief Scientific and Medical Officer Dan Skovronsky stated earlier this year that “unfortunately, tirzepatide is probably like every other drug we have which requires you to take it to continue to get the benefits.” His use of the word “unfortunately” applies to patients and payers — it’s very fortunate for Lilly and its shareholders.
The combination of Mounjaro and Zepbound could generate peak annual sales of more than $50 billion if analysts’ projections are on target. Lilly could very well soon have the world’s best-selling drug.
But while Mounjaro/Zepbound is the company’s crown jewel, Lilly has an abundance of riches in its current product lineup and pipeline. Verzenio is already a blockbuster in treating breast cancer, with sales skyrocketing 68% year over year in the third quarter of 2023. It’s in late-stage testing for treating prostate cancer, as well.
Sales for two other cancer therapies — Retevmo and Tyvyt — soared at least 50% year over year in Q3. Lilly’s type 2 diabetes drug Jardiance continues to perform well, with sales jumping 22% in the recent quarter. The company remains a major player in the autoimmune disease market with Taltz and Olumiant enjoying solid momentum.
The big drugmaker hopes to soon win FDA approval for donanemab in treating early stage Alzheimer’s disease. It seeks to add another autoimmune disease drug to its portfolio with lebrikizumab in treating atopic dermatitis.
Lilly could further boost its type 2 diabetes and weight loss franchise with orforglipron, an oral therapy that’s in phase 3 clinical studies. And those are just a few of the company’s promising pipeline candidates.
That seemingly bad news with the data released recently about tirzepatide truly is good news for Eli Lilly. I expect that the drugmaker and its shareholders will have plenty of more good news on the way over the next few years.
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Gilead Sciences. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
Eli Lilly’s drug tirzepatide was approved for weight loss by the FDA.
Courtesy of Eli Lilly
Patients who took Eli Lilly‘s weight loss drug Zepbound regained around half the weight they shed after stopping the newly approved treatment for a year, according to data released Monday.
The data, which represents the full results from an 88-week study funded by Eli Lilly, suggests that people have to stay on the weekly injection if they want to maintain significant weight loss.
Shares of Eli Lilly closed more than 2% lower Monday after the data was published in the research journal JAMA. The pharmaceutical giant released initial results from the same study, which was conducted by some Eli Lilly employees and some outside researchers, in July.
Zepbound, Novo Nordisk‘s weight loss injection Wegovy and their blockbuster diabetes counterparts have soared in popularity, and in turn have run in short supply in the U.S. over the past year because they help patients lose substantial weight without surgery. Some Wall Street analysts believe Zepbound, which uses the same active ingredient as Eli Lilly’s diabetes drug Mounjaro, could become the best-selling drug of all time.
People who discontinue Wegovy and Novo Nordisk’s diabetes medication Ozempic have also regained weight, raising concerns among U.S. health insurers about the high costs involved with long-term coverage of the pricey drugs.
The study on Eli Lilly’s treatment showed that 670 obese patients without diabetes lost around 20% of their body weight on average after taking Zepbound for 36 weeks. Half of those patients then continued the drug for another 52 weeks, while the other half switched to a placebo for the next year.
Patients who continued Zepbound lost an additional 6.7% of their weight on average from weeks 36 to 88, while those who stopped taking the drug regained 14.8% of their weight.
Still, those who discontinued Zepbound still ended the 88-week study with 9.9% less weight than they started with, indicating that they only regained about half the weight they initially lost.
“If you look at the magnitude of the weight gain, they gain back about half the weight they had originally lost over a one-year period of time,” lead study author Dr. Louis Aronne, an obesity medicine specialist and professor of metabolic research at Weill Cornell Medicine in New York City, said in an interview with CNN.
About 17% of those who stopped Zepbound maintained at least 80% of their original weight loss, the study said. Meanwhile, 9 in 10 of the people who continued Zepbound were able to maintain at least 80% of the weight they lost.
Throughout the full 88-week study, health-care professionals encouraged all patients to cut about 500 calories per day from their diet and exercise at least 150 minutes a week.
“Patients, providers and the public do not always understand obesity is a chronic disease that often requires ongoing treatment, which can mean that treatment is stopped once weight goals are met,” said Dr. Jeff Emmick, senior vice president of product development at Eli Lilly, in a statement.
But Emmick said Monday’s study shows that “continued therapy can help people living with obesity maintain their weight loss.”
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