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Does Eli Lilly Have a New Blockbuster Weight Loss Drug?

By Cory Renauer - Updated Mar 11, 2021 at 12:45PM

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Late-stage trial results suggest a potential new diabetes drug also helps people lose a lot more weight than Novo Nordisk's semaglutide.

Eli Lilly (LLY 1.25%) recently told investors great news regarding its experimental diabetes drug, tirzepatide. Results from a big head-to-head study with Novo Nordisk's (NVO 0.08%) competing treatment, Ozempic, say Lilly's candidate is a lot better at helping patients lose weight.

Ozempic hasn't been approved for weight loss yet, but the weekly injection is already expected to generate more than $6 billion in sales as a diabetes treatment this year. Is it just a matter of time before tirzepatide from Eli Lilly overtakes Ozempic as the leading type 2 diabetes treatment? Here's what pharma investors need to know about Lilly's potential new blockbuster.

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Why tirzepatide turned heads

Eli Lilly's type-2 diabetes candidate targets the same GLP-1 receptors as Ozempic, plus glucose-dependent insulinotropic polypeptide (GIP) receptors. Tirzepatide is the first to tackle GIP and GLP-1 at the same time and the technique appears to work even better than expected. 

The phase 3 Surpass-2 trial randomized 1,881 patients into four groups that received weekly injections of Ozempic or tirzepatide at 5 mg, 10 mg, or 15 mg. Across all three doses, treatment with tirzepatide led to significantly better blood sugar reductions than Ozempic. Superior blood sugar management was Lilly's main goal at the trial's outset, but investigators also reported an eye-popping weight loss benefit.

From a baseline of 206 pounds at the beginning of the study, the average patient randomized to receive Ozempic lost around 14 pounds. This was significantly less than patients who received tirzepatide at all dosages tested and those who received a 15 mg dose of tirzepatide lost an eye-popping 27 pounds on average.

A new blockbuster?

If eventually approved, tirzepatide won't have trouble generating more than $1 billion in annual sales. It could put pressure on Ozemipic, but it probably won't squeeze Novo Nordisk out of the type-2 diabetes treatment space entirely. In early 2020, the FDA approved Ozempic to reduce the risk of heart attacks for type 2 diabetes patients. Eli Lilly didn't begin a cardiovascular outcome study until last May and it will take several years to see if tirzepatide provides a stronger cardiovascular benefit.

Novo Nordisk investors probably don't have to worry about Ozempic succumbing to tirzepatide as a weight-loss treatment either. Last December, Novo Nordisk submitted an application that could expand Ozempic's drug label to include weight loss management at a much higher dosage than the one used in Eli Lilly's Surpass-2 study. Eli Lilly has still hasn't started recruiting patients for phase 3 weight loss trials with tirzepatide.

Efficacy results for Eli Lilly's next-generation diabetes drug are impressive, but it looks like engaging an extra family of receptors also has extra safety implications. Hypoglycemia or dangerously low blood sugar levels were reported by 1.7% of volunteers treated with 15 mg of tirzepatide compared to just 0.4% of patients given Ozempic. Tirzepatide discontinuation rates due to adverse events ranged from 5.1% to 7.9% depending on the dosage strength, compared to just 3.8% for Ozempic.

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Image source: Getty Images.

What's next for Eli Lilly?

It's still a little too early to assume tirzepatide will dominate the enormous space for type-2 diabetes treatments but it's probably still a good time to buy shares of Eli Lilly. The company has released a string of successful new drugs in recent years that could drive growth at a hair-raising pace over the next several years.

Last May, the FDA approved Retevmo, a daily capsule to treat a genetically defined population of lung cancer patients. It's quickly gaining popularity and we can expect more than $5 billion in annual sales from Retevmo by 2025. 

Retevmo isn't the only recent launch of Eli Lilly's with rapidly rising sales. Emgality for migraine headaches and Tyvyt for cancer launched in 2019 and both are on pace to reach $1 billion in annual sales by the end of 2021.

With a relatively young line of approved products driving sales growth now, plus new treatments like tirzepatide coming through the pipeline, Eli Lilly stock has what it takes to outperform in your portfolio. 

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