This Drug Combination for Eli Lilly Generated Significantly More Weight Loss Than Just Zepbound, but Discontinuation Rates Were Also Far Higher. Here's What This Could Mean for the Stock
Key Points
Eli Lilly recently announced results from a clinical trial that showed the company may have an even better weight loss treatment in the works.
Patients who took tirzepatide along with eloralintide were able to lose as much as 23.3% of their weight after 48 weeks.
Although Eli Lilly (NYSE:LLY) is a leader in the GLP-1 space, the drugmaker continues to develop new and potentially better treatments for people to lose weight. Not everyone has success with GLP-1 drugs or can effectively tolerate them.
Recently, the company released trial results that suggested a combination treatment involving tirzepatide (the active ingredient in Zepbound), along with another drug, resulted in even greater weight loss. But there was a catch -- discontinuation rates were higher. What does this ultimately mean for investors, and is the healthcare stock worth buying on this news?
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Trial participants achieved weight loss of up to 23.3%
After a period of just 48 weeks, patients who took tirzepatide along with eloralintide, which is an experimental drug that targets amylin, a natural hormone, but not GLP-1, achieved considerably more weight loss than just taking either drug alone. Patients who took a treatment that involved both drugs lost up to 23.3% of their weight versus just 14.8% with tirzepatide. Meanwhile, people who only took eloralintide lost up to 12.3%.
The one concern with the trial, however, was that a large number of people who took the combination treatment stopped it due to side effects. The discontinuation rate was as high as 27%, potentially suggesting that it wasn't well-tolerated among patients. But dosing can have a big impact on that, and the company's President of Lilly Cardiometabolic Health, Ken Custer, says high discontinuation rates weren't uncommon for tirzepatide either when it was in a mid-stage trial several years ago.
Eli Lilly's growth potential remains promising
Overall, these recent trial results were a net positive for Eli Lilly, as they suggest the company is on a promising path as it continues to look for ways to build up its lead in the anti-obesity market. Rather than just sitting back on its approvals thus far, the company has demonstrated a strong willingness and eagerness to stay ahead of the competition. It's already dominating the anti-obesity market today, and yet, it's still looking for the next best solution for patients. That's a sign of a great growth-oriented business.
The one potential obstacle for the stock today is its valuation. Eli Lilly has a market cap of more than $1 trillion, and it trades at close to 40 times its trailing earnings. Its valuation is steep. I do, however, believe it can still rise higher given its dominance and success. But investors may want to temper their expectations. Eli Lilly's stock is up around 10% this year, and while it may be an excellent long-term investment, its gains may be modest in the near term.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly. The Motley Fool has a disclosure policy.