Eli Lilly's lead in the obesity race gets wider after another win against rival Novo Nordisk

CNBC Finance

5 min read

In the lucrative obesity drug race, there is Eli Lilly â and then there's everybody else. A pair of headlines Monday reinforced Lilly's dominance: Its lone commercial rival, Novo Nordisk , released disappointing trial results comparing its next-generation obesity shot to Lilly's Zepbound. Additionally, Lilly announced a new form of Zepbound in the U.S. that provides a month's supply of the weekly injectable in a single device, rather than the status quo of one dose per device. The head-to-head data is the more significant development because it shows that Lilly remains the leader in weight-loss shot efficacy, a setback in Novo's efforts to follow up its blockbuster Wegovy with a more powerful new drug. Meanwhile, the new device for Zepbound, while likely not an immediate financial needle mover, demonstrates the wide net Lilly is casting to maintain its lead and showcases its supply chain advantages. Lilly is adding convenient options for patients, while Novo is racing to defend its pipeline. "At what point do we just say, 'You know, Lilly's got the better one and just move on?'" Jim Cramer said Monday on CNBC. "I don't see a path to own [Novo's] stock. I just don't," he said. "I still see a path to own Lilly ... I think Lilly may go much higher." Novo Nordisk's New York-listed shares fell more than 15% in Monday's session, reaching levels last seen in 2021. Lilly added more than 4%, putting the stock about 5% below its all-time closing high of roughly $1,110 on Nov. 25. LLY NVO 1Y mountain Lilly's stock performance versus Novo Nordisk over the past 12 months. In a press release Monday, Novo Nordisk said patients on a fixed dose of its experimental drug CagriSema achieved 23% weight loss after 84 weeks. By contrast, people on a fixed dose of Lilly's Zepbound lost 25.5% of their body weight during the head-to-head trial. CagriSema is Novo's lead candidate to succeed Wegovy. It targets two hormones that help regulate appetite and blood sugar: GLP-1 and amylin. Wegovy targets only GLP-1. Novo beat Lilly to the obesity market with Wegovy in 2021, kicking off the weight-loss drug boom. But in late 2023, Lilly secured U.S. approval for Zepbound, which targets the GLP-1 hormone and the GIP hormone. Studies show that Zepbound results in greater weight loss on average than Wegovy. That helped Zepbound overtake Wegovy as the market leader, erasing Novo's first-mover advantage. Lilly's heavy investments in manufacturing capacity also enabled Zepbound to be removed from the FDA's shortage list before Wegovy. Novo's main competitive advantage over Lilly is that its weight-loss pill is already on the market under the Wegovy brand. Launched at the start of this year, the Wegovy pill has seen encouraging prescription trends â proof that there is strong demand for an alternative to injectable obesity drugs. But Lilly isn't too far behind with its own needle-free obesity treatment. Lilly's pill is expected to receive FDA approval in April, and the company has built a stockpile of the drug to meet demand. Of course, Lilly faces competition in the obesity market from other drugmakers, including Amgen, which has a once-monthly injectable in several late-stage trials â though the two furthest along are expected to be completed next spring . Pfizer, meanwhile, bought obesity drug startup Metsera for $10 billion in the fall , winning a bidding war against Novo. While Metsera's lead asset showed promise in a mid-stage trial, it's still a ways away from reaching the market. That's also true of Roche's primary obesity candidate. In September, CNBC reported that Roche aimed to have a suite of obesity drugs on the market by 2030 . The challenge for weight-loss hopefuls â but good news for investors â is that Lilly is not easing up on its efforts. It has a loaded pipeline of next-generation treatments such as the highly effective retatrutide, which targets a third appetite-related hormone to drive additional weight loss. Another weight-loss candidate for Lilly is called eloralintide, which belongs to the amylin class of treatments, like Novo's CagriSema. Eloralintide is being studied as a standalone therapy and in combination with the active ingredient in Zepbound. As of Lilly's fourth-quarter earnings release, eloralintide had entered into a late-stage trial. Lilly is also looking at whether its GLP-1 drugs can help treat a range of other conditions, such as alcohol use disorder and bipolar disorder. In a note to clients Monday, Deutsche Bank analyst James Shin wrote, "We believed LLY's advantage over NVO was already widening following recent favorable next-gen readouts from LLY's Retatrutide ... and Eloralintide." Following the head-to-head victory against Novo, "it's now more clear the [GLP-1 diabetes and obesity] market is likely to coalesce around LLY's portfolio," he wrote. No disagreement there. (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.

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Eli Lilly's lead in the obesity race gets wider after another win against rival Novo Nordisk

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