Eli Lilly stock popped Wednesday after the Food and Drug Administration approved its highly anticipated weight-loss drug, now called Zepbound.
Notably, Lilly plans to sell Zepbound for $1,056 a month, Leerink Partners analyst David Risinger said in a report. That's essentially in line with the price for Mounjaro, Lilly's type 2 diabetes treatment. Both drugs use the active ingredient tirzepatide.
The price tag is a 20% discount to Novo Nordisk's rival weight-loss drug, Wegovy.
"Lilly investor relations told us that the company's Zepbound list price logic is driven by access... to facilitate employer opt-in to obesity medical riders in insurance plans," he said in a report.
On today's stock market, Eli Lilly stock jumped 3.2% to close at 619.13. Novo shares inched a fraction ahead, ending the regular session at 101.76.
Eli Lilly Stock: Mimicking Hormones
Zepbound mimics two gut hormones to improve feelings of satiety and blood sugar markers, and to slow how fast the stomach empties itself. The approval puts Lilly on deck to rival Novo, which sells market leader Wegovy. But Wegovy only mimics one gut hormone, GLP-1.
In testing, patients who took a high dose of Zepbound for 72 weeks lost an average 48 pounds.
"Obesity is a chronic disease that can result in serious health complications, including heart disease, stroke and diabetes," Joe Nadglowski, chief executive of the Obesity Action Coalition, said in a statement. "Despite our knowledge of obesity as a treatable, chronic disease, people living with obesity still face many challenges in their health and weight management journey."
Focusing On Diabetes, Weight Loss
Lilly is attempting to wrangle control of the diabetes and weight-loss drugs market. In addition to type 2 diabetes drug Mounjaro and now Zepbound in weight loss, the company is also working on a drug that targets three hormones to improve weight loss.
Similarly, Novo sells three iterations of its drug, semaglutide. Wegovy is the weight-loss drug, while Ozempic and Rybelsus treat type 2 diabetes.
Specifically, the FDA signed off on Zepbound as a chronic weight management tool for patients with a weight-related condition like high blood pressure, type 2 diabetes or high cholesterol.
The FDA estimates roughly 70% of American adults have obesity or are overweight, and many have a related condition. Losing just 5% to 10% of body weight through diet and exercise can reduce the risk of cardiovascular disease in people with obesity. In a study called Select, patients took Wegovy for five years and had a 20% reduced risk of heart attack, stroke or cardiovascular outcomes.
"In light of increasing rates of both obesity and overweight in the United States, today's approval addresses an unmet medical need," John Sharretts, director of the Division of Diabetes, Lipid Disorders and Obesity at the FDA's Center for Drug Evaluation and Research, said in a statement.
Massive Weight-Loss Drug Expectations
Analysts following Eli Lilly stock already have bullish expectations for Lilly's tirzepatide, the test name for Zepbound and Mounjaro. For 2023, they expect Mounjaro to bring in $4.49 billion in sales, surging more than 8,300% year over year. By 2028, sales could approach $22 billion.
Novo Nordisk is on a similar track with Wegovy and Ozempic. Ozempic is currently the better-selling drug with an expected $13.21 billion in sales this year. In comparison, analysts expect Wegovy — the weight-loss drug that Zepbound will rival — to bring in $4.4 billion in sales.
Analysts don't expect Wegovy sales to overtake Ozempic before 2028.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
