What happened
Shares of Eli Lilly (LLY 1.19%) were jumping 3.3% as of 11:22 a.m. ET on Wednesday. The gain came after Novo Nordisk (NVO 0.84%) announced that it plans to stop a kidney outcomes clinical trial evaluating Ozempic (semaglutide) in treating patients with type 2 diabetes and chronic kidney disease. The study's independent data monitoring committee recommended the trial be halted because results from an interim analysis showed an efficacy level that met pre-specified criteria.
So what
Novo Nordisk's shares were up 5.3% on the news. But why did Lilly's stock enjoy a nice bump, too? The general rule of thumb is that what's good for Ozempic is also good for Lilly's Mounjaro. This explains why both big pharma stocks rose on Wednesday.
Both Ozempic and Mounjaro are GLP-1 agonists that mimic the action of the glucagon-like peptide 1 (GLP-1) hormone. Mounjaro is also a GIP (glucose-dependent insulinotropic polypeptide) agonist. This dual mechanism of action appears to give Mounjaro efficacy advantages over Ozempic and other GLP-1 agonists. Because of this, several analysts predict that Mounjaro's sales will eventually surpass Ozempic's sales.
Lilly is currently evaluating Mounjaro in a phase 2 clinical study targeting patients who are overweight or obese and have chronic kidney disease. Novo Nordisk's encouraging move with Ozempic could bode well for Lilly's prospects with this study.
Now what
Big news for Mounjaro is on the way soon. The U.S. Food and Drug Administration (FDA) could announce its approval decision for the drug as a weight-loss treatment by the end of the year. A thumbs-up from the FDA would almost certainly provide a huge boost to Lilly's revenue in 2024.
