The good news keeps rolling in for Eli Lilly (NYSE:LLY), sending its shares higher at the start of the trading week.
Last week, Lilly announced that phase 3 clinical trials on its experimental GLP-1 drug retatrutide showed it is effective in reducing pain from knee osteoarthritis (OA). The trials conducted at Northwestern University showed that people taking high doses of the drug lost, on average, up to 25% of their body weight and experienced a 50% reduction in OA pain.
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The two results are linked, of course, as people dealing with obesity put additional stress on their knees. The GLP-1 drug also seems to have significant anti-inflammatory effects, which is positive for the knee joint.
The trial results suggest that retatrutide could be approved by the Food and Drug Administration (FDA) for both weight loss and relief from OA pain.
Image source: Getty Images.
In addition, Lilly and Hims & Hers Health (NYSE:HIMS) announced an agreement to expand access to two other Lilly-manufactured GLP-1s, Zepbound and Foundayo, on the Hims & Hers platform.
Finally, on Monday, Lilly announced that a phase 3 program found that its Foundayo drug significantly reduced the severity of obstructive sleep apnea. The company said the drug, which is already approved for weight loss, reduced breathing interruptions during sleep by up to 44% on average. Lilly plans to submit Foundayo to the FDA for the treatment of obstructive sleep apnea by the end of this year.
Despite the 51% run-up in Lilly’s share price over the past 52 weeks, and the fact that the stock is expensive at 47 times trailing earnings, I remain extremely bullish on Lilly, as I wrote just last week.
That’s because sales are exploding. Revenue rose 39% in the third quarter to $24.4 billion, and earnings per share increased 16% to $7.22. Even better, management raised its guidance for full-year revenue from between $85 billion and $87 billion to a range of $91 billion to $92 billion.
New markets and use cases for GLP-1 drugs
And I continue to believe that, due to the life-altering nature of GLP-1 drugs, that’s just the beginning. Not only are there huge untapped markets for obesity drugs around the world, but research continues to discover new use cases. The National Institutes of Health (NIH) say the medicines improve outcomes in people with cardiovascular, kidney, liver, arthritis, and sleep apnea disorders. Those improvements are mediated in part through anti-inflammatory and metabolic pathways.
