The weight loss market has garnered plenty of headlines over the past two years. Yet, to date, and despite plenty of pipeline candidates, only two brands dominate this field. One of them is Wegovy, a medication marketed by Novo Nordisk (NVO 0.30%), and the other is Zepbound, which was developed by Eli Lilly (LLY +0.07%). These two are the undisputed leaders in this therapeutic area, and they could soon solidify their lead with important new approvals. Let's look into and determine what it all means for investors.
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Novo Nordisk's dual agonist
Novo Nordisk's semaglutide, the active ingredient in Wegovy, mimics the action of the GLP-1 hormones, which play a role in regulating insulin and satiety. Wegovy is effective enough, but the company's CagriSema should be even more so. CagriSema is a dual agonist -- mimicking the actions of GLP-1 and another hormone called amylin, which also plays a role in controlling satiety, among others. This dual approach has proved powerful, as evidenced by Eli Lilly's Zepbound, a dual GLP-1/GIP agonist. Novo Nordisk first reported phase 3 results for CagriSema about a year ago.
Now, the company has finally announced that it is requesting approval for the medicine in the U.S. CagriSema performed better than semaglutide (the active ingredient in Wegovy) in clinical trials, so it could become Novo Nordisk's new growth driver.
NYSE: NVO
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Eli Lilly's new breakthrough
Eli Lilly reported several positive phase 3 results for orforglipron, its next-gen anti-obesity medicine, this year. The company has now requested approval for the therapy. There are at least two things to note about orforglipron. First, it is a daily oral pill, whereas Wegovy and Zepbound are administered subcutaneously once a week. Pills are a lot easier to handle, manufacture, store, and transport.
Many patients also prefer them over injections. So, there is a potentially attractive market for Eli Lilly's new gem. Second, orforglipron was the recipient of a Commissioner's National Priority Voucher, a new program in the U.S. that helps expedite the review of medicine to one to two months, versus the normal 10 to 12 months.
So, it could earn the green light fairly early next year.
NYSE: LLY
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Are these stocks buys?
Zepbound has been gaining market share, and Eli Lilly has reaped immense financial benefits. Meanwhile, Novo Nordisk's results haven't been as impressive as the market hoped, and several clinical setbacks sank the stock. One of them was actually with CagriSema, which failed to hit the 25% mean weight loss in phase 3 studies that management had hoped for.
The 22.7% mean weight loss it reported is still very competitive, but CagriSema is more complex and expensive to manufacture than Zepbound. Furthermore, Eli Lilly's retatrutide recently reported a superb weight loss of 28.7% on average at the highest dose in a phase 3 study. In other words, Eli Lilly should maintain its lead for the foreseeable future and continue delivering competitive returns.
However, Novo Nordisk might also be worth considering, especially as it has lost more than half its market value over the past two years. Its pipeline should also allow it to profit from the rapidly expanding weight loss market.
