Shares of Eli Lilly and Novo Nordisk both slipped on Tuesday following a report that most patients taking weight-loss drugs like Wegovy quit within a year.
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According to an analysis by pharmaceutical benefits manager Prime Therapeutics, only around a third of patients taking an obesity treatment like Wegovy were still taking it after a year. Meanwhile, total healthcare spending for the group has increased significantly, Reuters reported.
The report is bearish for companies like Eli Lily (LLY) and Novo Nordisk (NVO). Novo sells a pair of weight-loss drugs called Wegovy and Saxenda. Lilly hopes to follow with its diabetes-turned-obesity treatment, Mounjaro.
And a slew of others are working on similar drugs that rely on the same target: an intestinal hormone called GLP-1 that controls satiety signals and the rate at which the stomach empties.
In today’s stock market, Eli Lilly stock fell 3% to close at 439.39, while Novo Nordisk stock fell 3.1%, ending the regular session at 152.25 .
Eli Lilly Stock: Skyrocketing Health Care Costs
On average, patients paid $12,371 a year for health care costs before starting Wegovy or a similar weight-loss drug, the analysis found. After starting obesity treatment, costs jumped 59% to $19,657.
For the analysis, Prime counted all new prescriptions in the GLP-1 drug class between January and December 2021 for patients diagnosed with obesity, prediabetes, or having a body mass index of 30 or higher. The company excluded patients with type 2 diabetes.
Almost half of the patients were taking the injected drugs of Novo, Wegovy or Ozempic. The latter is a type 2 diabetes treatment that has been used off-label as a weight-loss drug. Others were given the weight-loss drugs Saxenda or Rybelsus, an oral treatment for diabetes.
Overall, 32% of patients were still taking their weight-loss drugs a year after the initial prescription, which spelled bad news for Eli Lilly and Novo Nordisk stocks. All patients had insurance coverage.
It is not known why the patients discontinued their weight-loss drugs. Many patients do not receive insurance coverage for obesity treatment. These patients may not have been able to afford the ongoing bill of copayments or deductibles. GLP-1 drugs are also linked to gastrointestinal side effects.
Novo Nordisk stock fell to its lowest level since March, slipping off a flat base with a buy point at 172.97, according to MarketSmith.com. Eli Lilly stock broke out of a profit zone after breaking out of a cut base with an entry at 375.25 in April.
Novo Nordisk Stock: a new side effect?
The report follows news that the European Medicines Agency is investigating a potential link between some of Novo’s diabetes medications and weight loss and suicidal thoughts.
The Icelandic Medicines Agency noted two cases of suicidal thoughts in patients who used Ozempic and Saxenda, according to Reuters. Another Saxenda patient reported thoughts of self-harm. Saxenda also impacts GLP-1, but uses a different chemical from Ozempic, Wegovy, and Rybelsus. These last three use an active ingredient called semaglutide.
Shares of Eli Lilly and Novo Nordisk swelled with enthusiasm for their weight-loss drugs. Lilly shares have a strong IBD numerical relative strength rating of 90 out of the best possible 99. This puts the stock’s 12-month performance in the top 10% of all stocks. Novo shares have an RS rating of 84.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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