Eli Lilly (LLY +0.70%) is one of the undisputed leaders in the fast-growing market for weight-management medicines. Following recent clinical wins, the company may even be taking the lead ahead of its only real competitor in the field, Novo Nordisk.
However, Lilly is not taking its foot off the pedal; it just made a move that could improve its already solid position in this space. Let's figure out whether this new development makes the company's shares even more attractive.
Long-acting weight-management drugs
There is no questioning the efficacy of Eli Lilly's Zepbound, its leading weight-management medicine. The therapy posted excellent results in clinical trials, and has now been in use in real-world settings long enough to confirm its clinical profile.
However, the treatment is administered via subcutaneous injection once weekly. Furthermore, evidence suggests that the medicine's efficacy wanes after people stop taking it, and they often regain much of the weight they had lost. So for optimal benefits, it's best to stay on the drug for a while, which is bothersome considering the dosing schedule of weekly injections.
Image source: Getty Images.
Weight-management leaders like Eli Lilly have been seeking a solution to this problem, and the healthcare specialist may have made an important step in that direction. On June 3, Camurus, a Sweden-based pharmaceutical company, announced that it had signed a deal to provide Lilly its proprietary FluidCrystal technology, designed for the long-acting delivery of medicines.
Camurus' technology can deliver therapies for days to months, thanks to a lipid solution injected with a syringe or autoinjector pen, which slowly releases the drug once it comes in contact with bodily fluids or body tissue. Eli Lilly will seek to use this tech with up to four of its GLP-1 medicines. The pharmaceutical giant will pay Camurus $290 million up front, with potential additional payments of up to $580 million in clinical, regulatory, and sales milestones, as well as royalties.
Plenty of reasons to buy the stock
If Eli Lilly can incorporate Camurus' FluidCrystal technology, its GLP-1 medicines might no longer need once-weekly dosing. That should make them more attractive and boost their already impressive sales.
Of course, there is more work to be done with this project, but it's worth pointing out that Lilly has already found another solution (of sorts) for this issue. The company recently reported positive phase 3 clinical trial results for orforglipron, an investigational GLP-1 medicine. Orforglipron is taken orally once a day -- a far better option for many patients. Eli Lilly continues to find ways to fend off the increasingly stiff competition in this market.
NYSE: LLY
Key Data Points
Several companies are working on oral formulations of GLP-1 therapies. Others are looking into long-acting weight-management options. Biotech giant Amgen reported positive but somewhat mixed data from a phase 2 study of MariTide, a once-monthly anti-obesity therapy, back in November. There will be more challengers in the future, but Eli Lilly seems ready to take on all of them, thanks to moves like the one it just made.
And beyond its work in this area, the company has a deep lineup and pipeline. It recently acquired a promising mid-stage investigational non-opioid pain medicine. Newer products, like Kisunla for Alzheimer's disease, Ebglyss for eczema, and Jaypirca for cancer, will contribute meaningfully to its top line eventually. Other pipeline assets, such as a gene therapy for one form of deafness, could also make steady clinical and regulatory progress.
And amid all that, Eli Lilly continues to grow its revenue at a faster pace than any of its comparable peers. In the first quarter, the company's revenue jumped by 45% year over year to $12.7 billion.
Some might point to the threat of tariffs as a reason to stay away from the stock. If President Donald Trump can implement his trade agenda, it might lead to higher costs for the company, eventually resulting in lower profits and margins. However, Lilly has long been expanding its local manufacturing capacity, and it continues to do so, so this isn't an issue that it can't overcome.
Considering the strength of its business, deep lineup and pipeline, excellent innovative capabilities, and rapidly growing dividend, Eli Lilly looks like a no-brainer buy.
