On Friday, the U.S. Food and Drug Administration approved Eli Lilly and Co.’s (NYSE:LLY) weight loss drug Zepbound for treating sleep apnea
What Happened: The FDA’s decision makes Zepbound the first approved drug treatment for patients with obesity and moderate-to-severe obstructive sleep apnea, or OSA.
“Too often, OSA is brushed off as ‘just snoring,’” said Julie Flygare, CEO of Project Sleep, in Eli Lilly’s press release. The condition affects an estimated 80 million Americans, with 20 million experiencing moderate-to-severe forms.
See Also: Weight Loss Drug Wars Heat Up: Amgen Challenges Eli Lilly, Novo’s Dominance
In a separate release, the FDA underscored that Zepbound should be used in conjunction with a reduced-calorie diet and increased physical activity for optimal results.
The approval could significantly impact insurance coverage for Zepbound, potentially including Medicare, which currently restricts coverage for obesity drugs unless approved for additional health benefits, noted CNBC.
This development also gives Eli Lilly an edge over competitor Novo Nordisk (NYSE:NVO), whose Wegovy isn’t approved for sleep apnea treatment.
Why It Matters: Zepbound’s effectiveness was demonstrated in clinical trials. Results showed that nearly half of patients treated with the highest dose experienced disease resolution, the report noted.
This was defined by a significant reduction in their apnea-hypopnea index (AHI), a key metric in diagnosing OSA.
The approval also comes as Eli Lilly continues to expand its manufacturing capabilities, including a $3 billion investment in Kenosha County, Wisconsin in December, to meet the growing demand for its diabetes and obesity medicines.
In October, Eli Lilly reported third-quarter revenue of $11.44 billion, a 20% increase year-over-year, but missed expectations of $12.10 billion. Zepbound generated $1.26 billion.
Price Action: As per Benzinga Pro, LLY shares increased by 1.35% to $767.76 on Friday. So far this year, LLY has risen by 29.65%.
The latest ratings from B of A Securities, Wolfe Research, and Deutsche Bank set an average price target of $1,004, indicating a potential upside of 30.77%.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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