Eli Lilly (LLY 2.26%) has been on a roll in recent years, thanks to its leadership in the weight management drug market. However, what happens after its current crop of ani-obesity medicines loses patent exclusivity? That won't be anytime soon, but considering how important they are to top-line growth, investors want assurances that Eli Lilly is planning for life after Zepbound years in advance. That's why one of the company's recent acquisitions could be a big deal.
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Eli Lilly makes a $1.2 billion bet
Eli Lilly recently agreed to acquire Ventyx Biosciences (VTYX +0.00%), a smaller drugmaker, for $1.2 billion in cash. Ventyx focuses on developing medicines across several therapeutic areas, including neurodegenerative diseases as well as autoinflammatory and cardiovascular diseases. One of its leading candidates is VTX3232, which has produced encouraging mid-stage results. In one study in obese patients with cardiovascular risk factors, VTX3232 reduced the cardiovascular risk even without inducing weight loss.
When paired with semaglutide (Wegovy), VTX3232 demonstrated significant reductions in various markers of inflammation and cardiovascular risk compared to semaglutide alone. In other words, it could be paired with GLP-1 medicines, especially to help certain patients at high risk of cardiovascular events. This investigational medicine also showed promising results in a phase 2 clinical trial for Parkinson's disease.
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What does this mean for Eli Lilly?
Eli Lilly's shares gained on the news of this acquisition. It's unlikely that upcoming data readouts will jolt the stock significantly more than that. However, this acquisition highlights, once again, that Eli Lilly is doing exactly what it is supposed to do. The company is using its success in weight management to expand its pipeline and decrease its exposure to this market. It isn't the only move Eli Lilly has made recently. Over the past couple of years, it has made several acquisitions and licensing agreements, strengthening its portfolio.
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For instance, last year, Eli Lilly acquired SiteOne Therapeutics, which had a promising non-opioid oral pain inhibitor in its pipeline, thereby expanding its footprint in this area. Eli Lilly also acquired Verve Therapeutics, a gene-editing specialist developing medicines for patients with a high cardiovascular risk.
Elsewhere, the company is making a push in oncology. Now, Eli Lilly's Zepbound and Mounjaro -- which share the same active ingredient, tirzepatide -- will still be its biggest growth drivers for the foreseeable future. But once that tailwind ends, or as competition in weight management intensifies, Eli Lilly should be able to overcome those obstacles. That's an important reason Eli Lilly's shares are worth buying.
