Prescriptions for Eli Lilly’s new weight-loss drug get off to a strong start and confirm bright outlook

Published Fri, Dec 15 20231:40 PM ESTUpdated Fri, Dec 15 20231:59 PM EST

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

The launch of Eli Lilly 's weight-loss drug Zepbound — a key pillar of our investment thesis in the pharmaceuticals giant — is going swimmingly in the U.S., Jefferies said Friday. Weekly Zepbound prescriptions totaled 7,700 in the week ended Dec. 8, its fourth on the U.S. market, according to Jefferies, which cited data compiled by health-care analytics firm IQVIA. That is more than Novo Nordisk 's Wegovy — currently the most popular obesity drug in the country — had in its fourth week after being approved in 2021, Jefferies concluded. "Zepbound has shown strong launch momentum in the weeks following its first prescription recorded," the analysts wrote in a research note. That's an encouraging finding for investors, given it will be more than a month before Eli Lilly reports earnings with formal revenue contributions from its much-hyped obesity drug. The Club holding typically reports fourth-quarter results in late January or early February. To be sure, it has been showing up indirectly in Lilly's revenue for more than a year because some people have been taking Eli Lilly's diabetes drug Mounjaro off-label for weight loss. Mounjaro and Zepbound share an active ingredient called tirzepatide. Nevertheless, we've been awaiting clues on the Zepbound rollout because the drug is such an important part to our multiyear investment in Eli Lilly. Jim Cramer has said tirzepatide — encompassing diabetes, weight loss and possibly other treatment indications in the coming years— could become the best-selling drug of all time. While Jefferies analysts are right to caution that "data over longer periods is required to build confidence in a sustained growth trajectory," it appears to be so far, so good for Zepbound. Eli Lilly's efforts to invest heavily to expand manufacturing capacity should help ensure the trajectory doesn't stall out due to shortages. LLY YTD mountain Eli Lilly's year-to-date stock performance. It took Wegovy seven weeks to reach Zepbound's current weekly prescription level, Jefferies said. But Jefferies analysts caveated the comparison by noting that public awareness around obesity drugs is much higher now than it was in 2021 when Wegovy hit the market. Wegovy and Zepbound belong to a class of drugs known as GLP-1s, which mimic a hormone in the gut to control blood sugar and effectively suppress appetitive, contributing to weight loss. GLP-1s first came onto the U.S. market nearly two decades ago as treatments for diabetes, but over the past year their popularity has soared due, in large part, to viral internet posts about their weight-loss potential. There are currently 2.5 times more GLP-1 prescriptions written across diabetes and obesity than when Wegovy hit the market, according to Jefferies. Weight-loss drugs received a notable mainstream endorsement earlier in the week when Oprah Winfrey said in a magazine interview she takes one. Winfrey is a longtime investor and board member of WW International , the parent company of WeightWatchers. Eli Lilly has been the worst-performing Club holding this week, with shares down more than 5% including Friday's 1.3% slide. The stock — among our biggest winners this year — started the week under pressure following the release of clinical-trial data that showed patients regained weight after they stopped taking Zepbound. Despite our belief that the results should help the stock , investors have so far responded bearishly. (Jim Cramer's Charitable Trust is long LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Eli Lilly's office in La Jolla, California.

Konrad Fiedler | Bloomberg | Getty Images

The launch of Eli Lilly's weight-loss drug Zepbound — a key pillar of our investment thesis in the pharmaceuticals giant — is going swimmingly in the U.S., Jefferies said Friday.