Eli Lilly stock and Novo Nordisk stock both skidded Tuesday on a report that most patients taking weight-loss drugs like Wegovy stopped within a year.
According to an analysis from pharmacy benefits manager Prime Therapeutics, only about a third of patients taking an obesity treatment like Wegovy were still taking it after a year. Meanwhile, total health care expenditures for the group rose markedly, Reuters reported.
The report is bearish for companies like Eli Lilly and Novo Nordisk. Novo sells a pair of weight-loss drugs called Wegovy and Saxenda. Lilly is hoping 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: a gut hormone called GLP-1 that controls satiety signals and how fast the stomach empties.
On today's stock market, Eli Lilly stock slumped 3% to close at 439.39, while Novo Nordisk stock toppled 3.1%, ending the regular session at 152.25.
Eli Lilly Stock: Soaring Health Care Costs
On average, patients were paying $12,371 a year for health care costs before starting Wegovy or a similar weight-loss drug, according to the analysis. After starting to take the obesity treatment, costs soared 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.
Nearly half of patients were taking Novo's injected drugs, Wegovy or Ozempic. The latter is a type 2 diabetes treatment that has been used off-label as a weight-loss drug. Others received weight-loss drug Saxenda or Rybelsus, an oral diabetes treatment.
Overall, 32% of patients were still taking their weight-loss drugs a year after the initial prescription, spelling bad news for Eli Lilly stock and Novo Nordisk stock. All patients had insurance coverage.
It's unclear why patients dropped their weight-loss drugs. Many patients don't receive insurance coverage for obesity treatment. It's possible these patients might not have been able to foot the continued bill for copays or deductibles. GLP-1 drugs are also tied to gastrointestinal side effects.
Novo Nordisk stock fell to its lowest point since March, sliding out of a flat base with a buy point at 172.97, according to MarketSmith.com. Eli Lilly stock dipped out of a profit-taking zone after breaking out of a cup base with an entry at 375.25 in April.
Novo Nordisk Stock: A New Side Effect?
The report comes on the heels of news that the European Medicines Agency is investigating a potential tie between some of Novo's diabetes and weight-loss drugs and suicidal thoughts.
The Icelandic Medicines Agency noted two cases of suicidal thoughts in patients who used Ozempic and Saxenda, according to Reuters. Another patient on Saxenda reported thoughts of self-injury. Saxenda also impacts GLP-1, but uses a different chemical from Ozempic, Wegovy and Rybelsus. The latter three use an active ingredient called semaglutide.
Eli Lilly stock and Novo Nordisk stock have surged on enthusiasm for their weight-loss drugs. Lilly shares have a strong IBD Digital Relative Strength Rating of 90 out of a best-possible 99. This puts the stock's 12-month performance in the leading 10% of all stocks. Novo shares have an RS Rating of 84.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
