Eli Lilly receives approval for its weight-loss drug. But here’s what could boost the stock next

By News Room Last updated Nov 8, 2023

Shares of Eli Lilly (LLY) jumped Wednesday after the U.S. government gave the green light for the company’s blockbuster GLP-1 drug to be used as an obesity treatment. But the stock’s next big catalyst could likely come after a key competitor releases fresh trial data this weekend. In a widely expected move, the U.S. Food and Drug Administration on Wednesday approved Eli Lilly’s GLP-1 drug for weight loss. The active ingredient in the drug, tirzepatide, was approved to treat Type 2 diabetes under the name Mounjaro in May 2022. Eli Lilly said it will market the drug as an obesity treatment under the name Zepbound. Shares of Eli Lilly — which have climbed more than 67% year-to-date — soared nearly 2% Wednesday afternoon, to $611.36 apiece. But the bigger news for investors may come at an American Heart Association meeting on Saturday. Eli Lilly’s chief rival, Novo Nordisk (NVO), is set to present the full results from a study that examined whether its GLP-1 weight-loss therapy can also reduce the risk of significant heart problems. Top-line data released in August exceeded expectations, showing patients on the drug had a 20% lower risk for major cardiovascular events like heart attacks and strokes compared with a placebo group. “I expect that Monday when we come in, [Eli Lilly] stock might be substantially higher,” as investors digest Novo Nordisk’s presentation, Jim Cramer predicted Wednesday. That would be similar to what occurred in August, when shares of both Novo Nordisk and Eli Lilly soared in response to the initial data announcement . The two companies dominate the fast-growing market for GLP-1 drugs, which are currently approved to treat Type 2 diabetes and obesity. Novo Nordisk’s GLP-1 is marketed as a weight-loss drug under the name Wegovy, which was approved by the FDA in June 2021 , and as a diabetes treatment under the name Ozempic. GLP-1 drugs mimic a hormone in the gut that, when released, reduces appetite. The drugs also help control blood sugar levels. Investors are focused on the data showing that Wegovy reduces the risk of strokes and heart attacks because it helps bolster the case for health insurers to provide reimbursement for the obesity drug and others like it. Broad insurance coverage is necessary for GLP-1 drugs to reach Wall Street’s lofty sales projections, which s ome analysts see exceeding $100 billion down the road. While we don’t own Novo Nordisk, Jim stressed that the Danish drugmaker’s upcoming presentation “does matter tremendously” for our investment in Eli Lilly. “I want people to be up on it and realize this is the next level for what I think will be the biggest selling drug of all time,” Jim said, referring to the expected sales of Mounjaro and Zepbound. (Jim Cramer’s Charitable Trust is long LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Eli Lilly and Company, Pharmaceutical company headquarters in Alcobendas, Madrid, Spain.

Cristina Arias | Cover | Getty Images

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