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Lilly's (LLY) Diabetes Drug Gets FDA Fast Track Tag for Obesity

Zacks Equity Research
·4-min read

Eli Lilly LLY announced that the FDA granted a Fast Track designation to its dual GIP and GLP-1 receptor agonist (GIP/GLP-1 RA) drug tirzepatide to treat adults with obesity or overweight with weight-related comorbidities.

Fast Track is designed to facilitate the development and acceleration of the review of drugs to treat serious conditions and fill an unmet medical need or offer a potential advantage over the existing treatments. A candidate, granted Fast Track designation, is also eligible for rolling review.

Tirzepatide is currently being marketed by Lilly under the trade name Mounjaro which was approved by the FDA earlier this year in May to treat type II diabetes. The drug is currently being evaluated in late-stage studies for treating obesity.

Eli Lilly intends to start a rolling submission of a new drug application (NDA) for tirzepatide in obesity later this year. The NDA filing will be supported by data from the SURMOUNT phase III clinical development program. Though the development program consists of six phase III studies, the data will be primarily supported by SURMOUNT-1 and SURMOUNT-2 studies.

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In April, Eli Lilly announced data from the SURMOUNT-1 study. The results showed that treatment with tirzepatide achieved at least 20% body weight reductions in more than half of the study participants without type 2 diabetes who have obesity or are overweight. Data from the ongoing SURMOUNT-2 study, which is expected to be completed by next April, is evaluating the drug in patients with type 2 diabetes who have obesity or are overweight. Data from other studies in the SURMOUNT development program are expected in the next year.

Lilly intends to complete the NDA submission after data from SUROUMT-2 study is available.

Shares of Eli Lilly have risen 20.5% so far this year against the industry’s 3.3% fall.

Zacks Investment Research
Zacks Investment Research


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If tirzepatide were to be approved for obesity, the drug has the potential to generate billions of dollars in sales for Lilly. Apart from obesity, tirzepatide is also being evaluated as a potential treatment for heart failure with preserved ejection fraction (HFpEF), obstructive sleep apnea (OSA), and non-alcoholic steatohepatitis (NASH).

Tirzepatide faces stiff competition in diabetes and obesity space from Novo Nordisk NVO, a key player in this space. Novo Nordisk’s semaglutide was approved by the FDA to treat type II diabetes and is being marketed under the trade name Ozempic. Last year in June, semaglutide was approved by the FDA to treat obesity or overweight in adults and is currently being marketed as Wegovy in the United States. Following the approval, Novo Nordisk’s Wegovy became the first drug to receive approval for chronic weight management in adults with general obesity or overweight since 2014.

Since the onset of 2022, Novo Nordisk has been facing supply challenges for Wegovy. NVO expects to resolve this issue by 2022-end and intends to meet the drug’s demands in the United States.

Zacks Rank & Stocks to Consider

Eli Lilly currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the overall healthcare sector include Codiak BioSciences CDAK and Novartis NVS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, estimates for Codiak BioSciences’ 2022 loss per share have narrowed from $1.94 to $1.81. During the same period, the loss estimates per share for 2023 have narrowed from $2.14 to $1.53. Shares of Codiak BioSciences have lost 93.3% in the year-to-date period.

Earnings of Codiak BioSciences beat estimates in three of the last four quarters and missed the mark just once, witnessing a surprise of 35.40%, on average. In the last reported quarter, CDAK delivered an earnings surprise of 61.54%.

In the past 60 days, estimates for Novartis’ 2022 earnings per share have increased from $6.06 to $6.07. Shares of Novartis have lost 13.1% in the year-to-date period.

Earnings of Novartis beat estimates in three of the last four quarters and missed the mark just once, witnessing a surprise of 1.39%, on average. In the last reported quarter, NVS delivered an earnings surprise of 3.31% .


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