There’s Eli Lilly and many other companies in the lucrative obesity drug race. Two headlines Monday reinforced Lilly’s advantage. The company’s only commercial rival, Novo Nordisk, has announced disappointing trial results comparing its next generation anti-obesity product with Lilly’s Zepbound. Additionally, Lilly announced a new format of Zepbound in the U.S. that provides a month’s supply of weekly injections in a single device, rather than the current one-dose per device. The head-to-head data shows Lilly remains the leader in weight-loss drug efficacy, so it’s a more significant development and a setback in Novo’s efforts to follow blockbuster Wegovy with a new, more powerful drug. Zepbound’s new device, on the other hand, probably won’t bring about any immediate economic change, but it does show that Lilly is casting a wide net to maintain its lead and points to its supply chain advantages. Lilly is adding convenient options for patients, while Novo is scrambling to protect its pipeline. “At what point can you just say, ‘Lilly’s better and move on,'” Jim Cramer said Monday on CNBC. “I don’t see a path to owning shares (in Novo). I just don’t think so,” he said. “I still see a path to making Lilly my own…I think Lilly could go higher.” Novo Nordisk’s New York-listed shares fell more than 15% in Monday trading, hitting levels last seen in 2021. Lilly added more than 4%, leaving its stock about 5% below its Nov. 25 all-time closing price of about $1,110. LLY NVO 1Y Mountain Lilly’s stock price performance versus Novo Nordisk over the past 12 months. Novo Nordisk announced in a press release on Monday that patients receiving a fixed dose of its investigational drug Kaglisema achieved a 23% weight loss after 84 weeks. In contrast, people who received a fixed dose of Lilly’s Zepbound lost 25.5% of their body weight during the direct trial. CagriSema is Novo’s leading candidate to replace Wegovy. It targets GLP-1 and amylin, two hormones that help regulate appetite and blood sugar levels. Wegovy targets only GLP-1. Novo entered the obesity market in 2021 by defeating Lilly with Wegoby, sparking a weight-loss drug boom. But in late 2023, Lilly secured U.S. approval for Zepbound, which targets the GLP-1 and GIP hormones. Research shows that Zepbound produces greater weight loss on average than Wegovy. This allowed Zepbound to overtake Wegovy and become the market leader, erasing Novo’s first-mover advantage. Lilly’s significant investments in manufacturing capacity led to Zepbound being removed from the FDA’s shortage list before Wegovy. Novo’s main competitive advantage over Lilly is that its weight loss drug is already on the market under the Wegovy brand. Launched earlier this year, Wegovy tablets have seen encouraging prescribing trends, evidence of strong demand for alternatives to injectable obesity drugs. But Lilly isn’t far behind with its own needle-free obesity treatment. Lilly’s pill is expected to receive FDA approval in April, and the company is stockpiling the drug to meet demand. Of course, Lilly faces competition from other drug companies in the obesity market. Amgen is developing the once-monthly shot in several late-stage trials, although the two most advanced trials are expected to be completed next spring. Meanwhile, Pfizer won a bidding war with Novo in the fall when it acquired obesity drug startup Metsala for $10 billion. While Metsala’s main assets have shown promise in mid-stage trials, it will take some time to bring them to market. This also applies to Roche’s leading obesity candidate. In September, CNBC reported that Roche aims to have a range of obesity drugs on the market by 2030. The challenge for those looking to lose weight is that Lilly doesn’t let up on its efforts, but the good news for investors is that it doesn’t slow down its efforts. The company has a rich pipeline of next-generation treatments, including the highly effective letartortide, which targets a third appetite-related hormone to promote further weight loss. Lilly’s other weight loss candidate is called elolalintide, which, like Novo’s CagriSema, belongs to the amylin class of treatments. Eloralintide is being studied as a standalone treatment and in combination with the active ingredient in Zepbound. At the time of Lilly’s fourth-quarter earnings release, elolalintide was in late-stage trials. Lilly is also considering whether its GLP-1 drug could help treat a variety of other diseases, including alcohol use disorder and bipolar disorder. “We believed LLY’s advantage over NVO was already expanding following recent positive next-generation forecasts from LLY’s retatortide and elolintide,” Deutsche Bank analyst James Singh wrote in a note to clients on Monday. Following the head-to-head victory against Novo, he wrote, “the potential for the (GLP-1 diabetes and obesity) market to converge around LLY’s portfolio becomes clearer.” There is no objection to that. (Jim Cramer’s Charitable Trust is Long LLY. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
