The promise of Eli Lilly’s weight-loss drug to treat sleep apnea adds reason to buy it

Eli Lilly’s weight-loss drug Zepbound shows promise in treating sleep apnea, giving investors more confidence to hold on to the world’s most valuable health care company even as it languishes over the past three years crushed the S&P 500’s performance. The findings, released by Eli Lilly on Wednesday, highlight the range of health benefits of drugs like Eli Lilly’s Zepbound and Mounjaro, known as GLP-1, beyond their increasingly popular use in treating obesity and type 2 diabetes. Eli Lilly is also studying GLP-1 to reduce the risk of cardiovascular events, such as heart attack and stroke, and a type of fatty liver disease. Eli Lilly’s main rival in the category, Novo Nordisk, recently received U.S. approval to also market its obesity drug Wegovy to treat heart disease in overweight patients. Novo Nordisk is the first to bring GLP-1 diabetes treatments Wegovy and Ozempic to market. Although Ozempic is a diabetes drug, it has become the public face of a new class of drugs that also produce dramatic weight loss. Eli Lilly said it plans to ask U.S. regulators to expand Zepbound’s label to include obstructive sleep apnea (OSA) later this year. According to the Mayo Clinic, OSA is one of three common types of sleep apnea. Approval of this indication may help bolster Zepbound’s case for insurance reimbursement and further illustrate that weight loss can do more than just improve health. Since entering the U.S. market late last year, Zepbound’s coverage has been spotty, largely due to its cost, which has a monthly price tag of $1,060. “I think insurance companies have to take note of some of these numbers,” Jim Cramer said Wednesday on CNBC. The active ingredient behind Zepbound and Mounjaro, called tezepatide, is what we call Eli Lilly The heart of an investment thesis. Jim has long said that tilsiparatide could become the best-selling drug of all time because of its ability to treat obesity and other conditions. It was first approved in May 2022 under the brand name Mounjaro to treat type 2 diabetes. Over the past few years, Eli Lilly’s stock price has pushed the GLP-1 craze to new heights. On March 4, the stock hit an all-time high of $800.78 per share, with a market value of more than $750 billion. Data on obstructive sleep apnea could open the door for Medicare to cover Zepbound, analysts at Morgan Stanley said in a note to clients Wednesday. Medicare’s prescription drug plan, known as Part D, currently prohibits coverage of strictly obesity drugs. Last month, the U.S. government agency that administers seniors’ health plans provided coverage for Novo’s Wegovy, which is used to reduce the risk of heart disease and stroke. Obstructive sleep apnea is characterized by obstruction of the airways, causing people to repeatedly stop breathing during sleep and experience low blood oxygen levels, prompting them to wake up and start breathing again, the Cleveland Clinic said. This disrupts 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 contributes to the development of obstructive sleep apnea (OSA), which is estimated to affect approximately 39 million U.S. adults. The current standard of care for obstructive sleep apnea is a positive airway pressure (PAP) machine, which helps patients keep their airways open while they sleep. Eli Lilly and Company on Wednesday released preliminary data from two late-stage trials, both of which showed that obese patients with moderate to severe obstructive sleep apnea improved their OSA over the course of 52 weeks. In one trial, patients taking Zepbound alone experienced an average of 27.4 fewer episodes of airflow limitation or complete obstruction per hour of sleep. Those who took the placebo had only an average of 4.8 fewer accidents per hour. In the second trial, OSA patients taking Zepbound and using a PAP machine experienced an average of 30.4 fewer events per hour, compared with 6 fewer events in the placebo group. Deutsche Bank analysts said in a note on Wednesday that the results, which have not yet been peer-reviewed, meet Wall Street’s threshold for being considered a success. Eli Lilly will present full data at the American Diabetes Association meeting in late June. The popularity of GLP-1 has surged in recent years. They mimic hormones in the gut to improve blood sugar control and effectively suppress appetite, leading to weight loss. Semaglutide, the active ingredient in Novo Nordisk’s Ozempic and Wegovy, works in a similar way to Lilly’s tirzepatide. The main difference: Eli Lilly’s compound targets a second hormone, called GIP, and is believed to increase its effectiveness. LLY NVO mountain 2021-05-09 Eli Lilly vs. Novo Nordisk The stocks of both companies have been on fire. Eli Lilly’s stock has risen nearly 300% over the past three years, including a 28% gain so far this year. Novo Nordisk’s shares have surged about 243% over the past three years and are up 19.5% so far in 2024. The two companies currently hold a duopoly in the GLP-1 market, which some Wall Street analysts predict could be worth $100 billion by the end of the decade. Despite its promise to treat other diseases, 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 2030 revenue forecast for tilsiparatide to about $62 billion, with $54 billion of that for diabetes and obesity. Analysts expect obstructive sleep apnea revenue to be $3 billion. (Jim Cramer’s Charitable Trust is long LLY. See here for the full list of stocks.) As a subscriber to Jim Cramer’s CNBC Investing Club, you’ll get to know Jim Cramer’s (Jim Cramer) Receive trade alerts before making a trade. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation is created or created by any information you receive in connection with the Investment Club. No specific results or profits are guaranteed.

An injection pen for Eli Lilly and Company’s weight loss drug Zepbound is on display in New York City on December 11, 2023.

Brendan McDermid | Reuters

Eli Lilly and CompanyWeight loss drug Zepbound shows promise in treating sleep apnea, giving investors more confidence to hold on to the world’s most valuable healthcare company even as it crushes the S&P 500 over the past three years Performance.

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