Eli Lilly's weight-loss drug Zepbound has shown promising results as a treatment for sleep apnea, giving investors more confidence to continue owning the world's most valuable healthcare company even after it has crushed the S&P 500's performance over the past three years. The results of the study published by Eli Lilly on Wednesday highlight the range of health benefits that drugs like Lilly's Zepbound and Moonjaro — known as GLP-1s — could have beyond their increasingly common uses in treating obesity and type 2 diabetes. Lilly is also looking at GLP-1s to reduce the risk of cardiovascular disease, such as heart attacks and strokes, and a type of fatty liver disease. Novo Nordisk, Lilly's main competitor in the category, recently received U.S. approval to market its obesity drug Wegovy also as a treatment for heart disease in overweight patients. Novo Nordisk was the first to market the GLP-1s Wegovy and Ozempic for the treatment of diabetes. While Ozempic is a diabetes drug, it has become the public face of this emerging class of medications that also results in significant weight loss. Eli Lilly said it plans to ask U.S. regulators to expand the Zepbound label to include obstructive sleep apnea, or OSA, later this year. OSA is one of the three common types of sleep apnea, according to Mayo Clini c. Approval for this indication could help strengthen Zepbound's insurance reimbursement case and also demonstrates that weight loss can lead to more than just cosmetic improvements to health. Insurance coverage for Zepbound has been spotty since it hit the U.S. market late last year, largely due to its cost, with a monthly list price of $1,060. “I think some of these are numbers that insurance companies are going to have to pay attention to,” Jim Cramer said Wednesday on CNBC. The active ingredient behind Zepbound and Mounjaro – known as tirzepatide – is the core of our investment thesis at Eli Lilly. Jim has long said that terzepatide could become the best-selling drug of all time for its ability to treat obesity and other conditions. It was first approved to treat type 2 diabetes under the Mounjaro brand in May 2022. Eli Lilly shares have taken the GLP-1 craze to new heights over the past few years. The stock reached a record high of $800.78 per share on March 4, with a market cap 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, analysts at Morgan Stanley said in a note to clients on Wednesday. Medicare prescription drug plans, known as Part D, are currently strictly prohibited from covering obesity drugs. Last month, the U.S. government agency that runs the health program for seniors enabled coverage for Novo's Wegovy when the drug is prescribed to reduce the risk of heart attacks and strokes. Obstructive sleep apnea is characterized by airway obstruction that causes people to repeatedly stop breathing during sleep and experience low blood oxygen, prompting them to wake up to start breathing again, according to the Cleveland Clinic. This disrupts their ability to get high-quality sleep — and, over time, can lead to other health complications, such as daytime sleepiness, heart damage, and even sudden death. Obesity can contribute to the development of obstructive sleep apnea (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 is positive airway pressure, or PAP, machines, which help keep patients' airways open while they sleep. Eli Lilly released preliminary data from two late-stage trials on Wednesday, both of which showed that obese patients with moderate to severe OSA saw improvements in obstructive sleep apnea (OSA) over the course of a 52-week trial. . In one trial, patients who took only Zepbound experienced an average of 27.4 fewer episodes of restricted or completely blocked airflow per hour of sleep. Those taking the placebo saw an average reduction of only 4.8 incidents per hour. In a second trial, sleep apnea patients who took Zepbound and used a PAP machine experienced an average of 30.4 fewer incidents per hour, compared with six fewer incidents in the placebo group. The results, which have not yet been reviewed, met Wall Street's threshold for being considered a success, Deutsche Bank analysts said in a note on Wednesday. Eli Lilly will present full data at the American Diabetes Association conference in late June. The popularity of GLP-1s has risen dramatically in recent years. They mimic a hormone found in the intestines to improve blood sugar control and effectively suppress appetite, leading to weight loss. The active ingredient in Novo Nordisk's Ozempic and Wegovy, semaglutide, works in a similar way to Lilly's tirzepatide. Key difference: Lilly's compound targets a second hormone called GIP, which is thought to enhance its effectiveness. LLY NVO Mountain 2021-05-09 Eli Lilly vs. Novo Nordisk Shares of both companies are on fire. Eli Lilly has gained nearly 300% over the past three years, including a 28% year-to-date increase. Novo Nordisk shares are up about 243% over the past three years and 19.5% so far in 2024. Along the way, these gains have undercut the performance of the S&P 500 and the healthcare sector index. The two companies currently enjoy a duopoly in the GLP-1 market, which some Wall Street analysts expect will be worth $100 billion by the end of the decade. Despite promises to treat other conditions, the lion's share of GLP-1 sales is still likely to come from diabetes and obesity. In a note to clients last month, Bank of America raised its 2030 revenue forecast for terzepatide to nearly $62 billion, with $54 billion for diabetes and obesity. Analysts expected obstructive sleep apnea revenues of $3 billion. (Jim Cramer's Charitable Trust is long LLY. See here for a full list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you'll receive a trade alert before Jim takes a trade. Jim waits 45 minutes after a trade alert is sent before buying or selling a stock in his charitable fund's portfolio. If Jim talks 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. 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Zippound injection pen, Eli Lilly's weight-loss drug, is on display in New York City on December 11, 2023.
Brendan McDiarmid | Reuters
Eli LillyWeight-loss drug Zepbound has shown promising results as a treatment for sleep apnea, giving investors more confidence to continue owning the world's most valuable healthcare company even after it has crushed the performance of the S&P 500 over the past three years.
