Eli Lilly (LLY 0.65%) sells a broad portfolio of products, but two in particular have helped revenue growth explode in recent times. I'm talking about Lilly drugs that doctors prescribe for weight loss: Mounjaro and Zepbound. They're both based on the same molecule, but regulators approved the product for type 2 diabetes under the name Mounjaro and specifically for weight management under the name Zepbound.
The company won approval for Mounjaro first, back in 2022, and that drug brought in more than $1.8 billion in the most recent quarter. Zepbound, approved late last year, generated about $517 million in its first full quarter on the market. Lilly dominates the weight loss scene along with Novo Nordisk, a maker of two drugs that function in a similar manner.
But other companies aim to get in on the billion-dollar market, and just recently, big biotech Amgen (AMGN 1.61%) reported promising news from a clinical trial of its weight loss candidate MariTide. Does this represent a threat to Eli Lilly's drugs and its overall earnings prospects? Let's find out.
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Amgen's MariTide
First, let's talk about the Amgen news. The biotech company is studying MariTide, a molecule that blocks the gastric inhibitory polypeptide receptor (GIPR) -- a receptor for a hormone involved in obesity -- and acts on the glucagon-like peptide 1 (GLP-1) receptor, which interacts with a hormone that regulates blood-sugar levels. The MariTide phase 2 trial is ongoing, with full data expected later this year, but the company said it's "very encouraged" by interim results.
The next step will be a phase 3 trial to study the candidate in obesity, diabetes, and obesity-related conditions. Amgen aims to deliver MariTide through a handheld auto-injector device, with dosing monthly or even less frequently.
Lilly's Zepbound and Mounjaro work in a similar way, acting on GLP-1 and glucose-dependent insulinotropic polypeptide (GIP), and thus helping control blood-sugar levels and appetite. They come in a pen format that patients can inject on their own on a weekly basis.
Where MariTide may have an advantage is its dosing frequency: If patients are able to administer it less frequently than another weight loss drug, and still benefit from solid efficacy, it could win market share.
Where this leaves Eli Lilly
So does this mean Eli Lilly should start worrying? Not necessarily.
First, it's important to note that though MariTide's data are positive so far, the candidate still has a way to go before reaching commercialization. During that time, there's always the possibility of a setback or disappointment, so its future presence on the market isn't a sure thing.
Second, if MariTide does reach commercialization, it may face more than Lilly's current weight loss drugs -- it may face even newer ones. Eli Lilly isn't sitting still and counting only on Mounjaro and Zepbound. The company has other studies underway, on candidates that could improve on its current drugs.
For example, it's studying retatrutide, an obesity candidate that targets three hormones involved in digestion -- today's obesity drugs target just one or two. The company is aiming for its approval in obesity, osteoarthritis, obstructive sleep apnea, and type 2 diabetes. And Lilly is also investigating orforglipron, an oral daily candidate for weight management. Both candidates are involved in phase 3 studies.
Finally, it's important to note that demand is so high for safe and effective weight loss drugs that there's room for more than one or two companies to be successful. Eli Lilly and Novo Nordisk have both been unable to keep up with demand and have been pushed to invest in greater manufacturing capacity. Goldman Sachs Research suggests that demand is set to continue, and that the weight loss drug market could increase 16 times to reach $100 billion by 2030.
What does that mean for you as an investor? Often, when a potential rival reports positive data from a weight loss candidate, Lilly's shares decline. But you really shouldn't worry about Lilly's position in this billion-dollar market. The company, along with Novo Nordisk, is a leader today, and has candidates in late-stage trials that could add to growth down the road.
And, as mentioned above, there's room for multiple players in this high-growth market. So if you're looking for a combination of growth and the stability often associated with healthcare companies, Eli Lilly still makes a great buy today.
