Eli Lilly’s expanding pipeline of obesity drugs gives the stock little reason to take profits at this point, even after hitting record highs. “This is a parabolic spike. I don’t buy parabolic things,” Jim Cramer said Monday on “Squawk on the Street.” “But we can’t sell it. We’re not going to take the profits.” Jim said he’d like to let Lilly rise for now, noting that the club’s shares are up 35% from their year-to-date low in late April and 85% from last August’s 52-week low of nearly $624. Eli Lilly’s stock traded at an all-time high during Monday trading after the company presented new data on its next-generation obesity drug letartortide at the American Diabetes Association conference in New Orleans on Saturday. One of the most encouraging findings was that doses as low as 4 milligrams of letaltortide produced about 19% weight loss, comparable to the highest doses of Lilly’s blockbuster obesity drug Zepbound. The maximum dose of Zepbound is 15 milligrams. Both are injectables. Another difference is that Zepbound is a so-called dual agonist drug. It activates two hormones: GLP-1, which reduces hunger, and GIP, which helps activate insulin. Retatortide is a triple agonist and has added glucagon to increase metabolism. Rival Novo Nordisk’s Wigobee targets only GLP-1. Wegovy is both an injection and a pill. Lily’s weight loss drug, Foundayo, is off to a strong start. These results confirmed our belief that Eli Lilly is extending its lead in the obesity drug market. “I think the majority view is that Lily is kind of exiting in a Secretariat kind of way,” Jim said of the legendary racehorse. Investors are increasingly focused on the strength of Lilly’s pipeline. While the stock is up about 8% since the beginning of the year, Novo Nordisk’s share price is down about 18% over the same period. Wall Street analysts were similarly optimistic, arguing that ritatortide’s combination of strong efficacy and good tolerability could significantly expand commercial opportunities. Goldman Sachs said Lilly’s obesity pipeline highlights a “rapidly evolving next-generation innovation engine.” Barclays wrote that letaltortide “delivered on the promise of moving the possible goalposts in obesity drug therapy.” Lilly’s opportunities go far beyond weight loss, pointing to growing evidence that GLP-1 drugs can benefit patients with conditions ranging from sleep apnea to cardiovascular disease. “They can actually do more,” Jim says. “We’re already seeing sleep apnea, but we’re going to start seeing more heart, blood pressure, and even Alzheimer’s disease.” Jim also pushed back against efforts by some employers and insurance companies to limit coverage of GLP-1 therapy because of cost, arguing that the long-term health benefits of the drug can outweigh the short-term costs. “Companies that are cutting back are stupid,” Jim said. “Don’t save on this. Save on just about everything else. This has value.” (Jim Cramer’s charitable trust is long Eli Lilly. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you’ll 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.
