Prescriptions of popular weight-loss and diabetes drugs rocketed in the first six months of the year — giving already sky-high Novo Nordisk stock and Eli Lilly stock more room to run.
The companies make drugs that mimic a gut hormone called GLP-1. Doing so can improve feelings of satiety and slow how fast the stomach empties itself. These drugs can also lead to improvements in markers of diabetes, including blood sugar.
In June, doctors wrote about 5.2 million prescriptions for drugs in this class. That's up 90% year over year, Evercore ISI analyst Elizabeth Anderson said in a note to clients Wednesday. But in July, that number peeled back slightly to 4.8 million prescriptions. Still, July scripts climbed about 77% year over year.
And there's still plenty of room for GLP-1 drugs to gain traction. In June, they represented just 1% of total prescriptions, Anderson said.
Wall Street is enthusiastic for the potential of the drug class in weight loss. So far, only Wegovy from Novo is approved for obesity treatment, but Lilly hopes to follow with diabetes treatment Mounjaro. On Wednesday, Eli Lilly stock hit a record high. Novo Nordisk stock hit a record on Aug. 8.
Eli Lilly Stock: Prescription Trends Are Key
The prescription news lines up with recent commentary from Cardinal Health. The drug wholesaler said growing interest in GLP-1 drugs was a revenue tailwind in the fiscal fourth quarter, ended June 30.
Prescription trends are an important indicator of demand.
On its recent earnings conference call, Novo Nordisk said it's relaunching weight-loss drug Wegovy in the U.S. The company wants to provide a sustainable amount of the drug. Sales of weight-loss meds Wegovy and Saxenda beat expectations, though diabetes medicines Ozempic and Rybelsus were light. All four are GLP-1 drugs.
Mounjaro Smashes Expectations
Meanwhile, revenue from Lilly's Mounjaro skyrocketed by a quadruple-digit percentage in the June quarter and smashed expectations. Mounjaro is a next-generation GLP-1 drug that loops in a second mechanism. The company's biggest drug is another GLP-1 called Trulicity. Trulicity sales slid 5%.
But Eli Lilly stock surged on the company's earnings report and boost in its outlook — sparked in part by Mounjaro's outperformance. Novo Nordisk stock, on the other hand, fell following its report. Still, shares of both are above buy zones out of flat bases, according to MarketSmith.com.
The next big catalyst for Novo Nordisk stock and Eli Lilly stock will likely be the full results of a Novo study called Select. Novo tested Wegovy over five years and found it reduced the likelihood of heart attack, stroke and other cardiovascular events by 20%. That could be enough to push insurers to cover the weight-loss medication for a broader group of patients.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
