New trial data has cemented Club holding Eli Lilly ‘s pole position in the highly competitive obesity drug race. The news Eli Lilly’s obesity drug Zepbound bested its main rival Wegovy — made by Denmark’s Novo Nordisk — in the first head-to-head trial comparing the fast-growing weight loss treatments. Patients on Zepound lost an average of 20.2% of their body weight after 72 weeks on the drug, compared with 13.7% for those who took Wegovy, Eli Lilly said in a press release Wednesday . Additionally, nearly 32% of people on Zepbound lost at least a quarter of their body weight versus 16% on Wegovy, according to the Indianopolis-based drugmaker. Shares of Eli Lilly, a longtime portfolio name, rose more than 2.5% Wednesday, to around $833 apiece. Novo Nordisk ticked higher by about half a percent. Big picture Zepbound and Wegovy belong to the booming class of obesity drugs known as GLP-1s, which some on Wall Street expect to be worth at least $100 billion by the end of the decade. Initially used to treat type-2 diabetes, their weight-loss capabilities have captivated the public and Wall Street alike in recent years and propelled the stocks of Eli Lilly and Novo Nordisk to extraordinary heights. Lilly, in particular, has ridden the GLP-1 wave to become the most valuable health-care company in the world, at nearly $800 billion. The drugs mimic the naturally occurring GLP-1 hormone to help regulate blood sugar and suppress appetite, leading to weight loss. Zepbound’s active ingredient tirzepatide also targets a second hormone abbreviated as GIP, which is believed to provide efficacy advantages over Wegovy. Both drugs are once-weekly injections. Indeed, the results released Wednesday by Eli Lilly are not necessarily a surprise considering the existing stack of clinical trial data looking at both drugs in isolation. But given the caveats needed when comparing the results of independent trials, there is value in officially seeing how Zepbound and Wegovy fared on a head-to-head basis. Peer-reviewed results are due out next year. “We expect HTH (head-to-head) clinical trial results to help drive accelerating Zepbound market share gains relative to Wegovy,” analysts at Leerink wrote in a note to clients Wednesday. Analysts added that they wanted to see how the tolerability of both drugs looked — something absent in Lilly’s press release. Novo Nordisk was first to market, with Wegovy receiving Food and Drug Administration clearance for obesity in 2021. Its sister drug Ozempic, which shares an active ingredient with Wegovy called semaglutide, was approved for type-2 diabetes treatment in 2017. Ozempic is arguably the best-known GLP-1 drug and some people take it for weight-loss purposes. The FDA approved Zepbound in November 2023 . Lilly’s Mounjaro, which shares tirzepatide as its active ingredient, was cleared for type-2 diabetes in May 2022. The success Novo Nordisk and Eli Lilly have found in the GLP-1 market has set off a crowded race in the pharmaceutical industry to find the next hit obesity drug. Novo and Lilly are aggressively defending their turf, investing billions of dollars to build out the manufacturing capacity needed to meet current demand at the same time they’re advancing clinical trials of next-generation treatments. Investors anticipate a critical update on Novo’s next-gen CagriSema by the end of the year, with expectations that it could deliver more than 25% weight loss in a late-stage trial. The drug combines a compound called cagrilintide with semaglutide. The leading product in Eli Lilly’s pipeline is retatrutide, which generated an average of 24% weight loss in a 48-week midstage study released last summer . A phase three trial is underway. Bottom line We’re feeling even better about our decision to add to our Eli Lilly position last week — shortly thereafter, we got the very important news that the Biden administration proposed changes that would expand coverage for GLP-1s to millions of Americans on Medicare and Medicaid that currently lack access. Now we have trial results that show Zepbound is, as we long suspected, superior to Wegovy. Shares of Eli Lilly sold off last month on concerns about President-elect Donald Trump nominating pharmaceutical industry critic Robert F. Kennedy Jr. to be the top U.S. health official . However, the stock is now up more than 14% since closing at roughly $727 apiece on Nov. 18. Our trading restrictions prevented us from adding to our position that day, though we still communicated our desire to members . LLY YTD mountain Eli Lilly YTD “I think [Lilly stock] should return to the $900 level,” Jim Cramer said Wednesday on the Morning Meeting. “I think the only gating factor is … does [Lilly CEO] Dave Ricks have the capacity to meet the demand? That is really the issue.” Since hitting the market, both Zepbound and Mounjaro have spent a considerable amount of time on the FDA’s drug shortage list . As of Wednesday, though, the FDA says the shortages have been resolved. Lilly executives said in the company’s late October earnings call that production capacity for the medicines should expand even further in 2025. (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. 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New trial data has cemented Club holding Eli Lilly‘s pole position in the highly competitive obesity drug race.
