Eli Lilly (NYSE:LLY) has achieved impressive returns in recent years, driven by soaring demand for tirzepatide, a medicine sold as Mounjaro for diabetes and Zepbound (in certain markets) for obesity. Tirzepatide has reached an amazing milestone: It has become the world's best-selling compound, despite being launched only about four years ago.
That all sounds exciting, but considering tirzepatide accounted for 65% of Eli Lilly's revenue in the second quarter, what happens when competition in the GLP-1 market heats up, and many new therapies enter the fray? That's a real risk to monitor, but Eli Lilly is also aware of it and is working diligently to mitigate it.
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The drugmaker recently posted clinical trial results suggesting tirzepatide may still have a significant growth runway, even as it faces increased competition.
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Eli Lilly ran a pair of phase 3b studies that enrolled patients with moderate-to-severe plaque psoriasis or active psoriatic arthritis who were also obese. These trials compared the efficacy of tirzepatide combined with Eli Lilly's Taltz, an immunosuppressant, versus taking Taltz alone. The results were highly instructive. For instance, 30.6% of patients with plaque psoriasis taking tirzepatide and Taltz achieved 100% skin clearance and at least 10% weight loss, compared to just 4.4% of those taking Taltz alone after 52 weeks
Also, 39.2% of patients with active psoriatic arthritis had achieved at least a 50% improvement in symptoms and at least 10% weight loss, compared with 1.7% of those taking only Taltz at week 52. There were other benefits of the combined therapy approach. Patients achieved greater improvements in glucose, cholesterol, BMI (Body Mass Index), and other important metabolic metrics when taking both tirzepatide and Taltz.
The results of these clinical trials could have meaningful implications for tirzepatide. Let's consider two potential positive consequences. First, the medicine should continue expanding beyond its core markets of diabetes and weight management. It is also approved for obstructive sleep apnea, and it may eventually win label expansions across autoimmune disorders.
That means even as more weight-loss therapies enter the market, Eli Lilly's tirzepatide empire could remain mostly intact thanks to the medicine's excellent efficacy in diabetes and weight loss, and its ability to improve symptoms across other conditions.
Second, Eli Lilly could secure broader health insurance coverage for tirzepatide. So far, coverage has been lacking in the U.S. Demand for the medicine hasn't been as strong as it otherwise would be, since many are left paying the high monthly out-of-pocket cost. But health insurance companies will be more likely to pick up the tab as Eli Lilly shows that Zepbound is effective across other conditions.
Eli Lilly is also running studies testing tirzepatide along with Omvoh, a medicine approved for Crohn's disease and ulcerative colitis. Further, the company is testing its crown jewel in other potentially lucrative markets, such as metabolic dysfunction-associated steatotic liver disease. Approvals across even some of those indications will meaningfully expand tirzepatide's addressable opportunity.
Eli Lilly is taking a similar approach with other promising weight-loss medicines. The company's oral GLP-1, Foundayo, which is already approved for weight loss and could earn an indication in diabetes in the future, is also being tested for obstructive sleep apnea, hypertension, osteoarthritis pain, and stress urinary incontinence.
Eli Lilly's next-gen weight-loss medicine, retatrutide, is also being tested across multiple indications after having posted arguably the most impressive phase 3 weight-loss results in the industry to date. What does all this mean for Eli Lilly's future?
The company's revenue and earnings growth should remain fairly strong over the medium term as it secures new approvals and label expansions for its core GLP-1 portfolio. And even as new medicines enter the market, Eli Lilly is well-positioned to defend its position. In short, the company's stock remains a buy.
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Prosper Junior Bakiny has positions in Eli Lilly. The Motley Fool has positions in and recommends Eli Lilly. The Motley Fool has a disclosure policy.
Great News for Eli Lilly Stock Investors was originally published by The Motley Fool