Eli Lilly's weight-loss and diabetes drugs are no longer in shortage, says FDA

By Ciara Linnane

News weighs on stocks of companies offering alternatives and some smaller ones developing their own drugs

The U.S. Food and Drug Administration said Eli Lilly's diabetes and weight-loss drugs marketed as Zepbound and Mounjaro are no longer in shortage, signaling that the company has succeeded in expanding manufacturing.

Rival Novo Nordisk's (NVO) (DK:NOVO.B) drugs, Ozempic and Wegovy, remain in shortage, however, according to the FDA's website.

The two companies are current leaders in the weight-loss category, which has proved highly popular with consumers. Both are trying to expand manufacturing capacity. Lilly (LLY) announced plans Wednesday to invest $4.5 billion in a new plant in Indiana that will produce new medicines and scale up manufacturing of existing medicines.

"We view this announcement as another positive indication for Lilly's growing incretin portfolio," BMO analyst Evan David Seigerman wrote in a note to clients. "With Lilly able to adequately supply current and future demand for tirzepatide, we believe it could continue to grow market share in incretin products as manufacturing continues to expand."

Tirzepatide is the medical name for the drug. BMO has an outperform rating on Lilly's stock, or the equivalent of buy.

The Lilly news weighed heavily on the stock of Hims and Hers Health Inc. (HIMS), which was down 12% in early trade. That company was allowed under FDA rules to make its own version of the weight-loss drugs as long as there was a shortage and a patient need.

Read now: Novo Nordisk CEO spars with lawmakers over Ozempic, Wegovy prices

Some of the smaller companies developing rival weight-loss drugs were also lower Thursday.

See also: Obesity drugs in kindergarten? Novo Nordisk GLP-1 drug works for kids as young as 6, study finds.

Amgen Inc. (AMGN), which is currently in a Phase 2 trial of a treatment called MariTide, was down 0.3%. MariTide stands apart from competitors with potential monthly or even less frequent dosing, a factor that could help control the unpleasant gastrointestinal side effects that often come with weight-loss drugs, analysts said.

Scholar Rock Holding Corp. (SRRK), which is working on a treatment that helps preserve lean muscle that is often lost during rapid weight loss, was down 3.4%.

Terns Pharmaceuticals Inc. was down 0.6%. That company is developing an oral weight-loss drug-Lilly's and Novo's treatments are administered by injection.

Viking Therapeutics Inc. (VKTX), which is also working to develop an oral weight-loss drug, reversed early losses to trade up 1%.

Structure Therapeutics Inc. (GPCR), whose oral drug is expected to move to a Phase 2b study in the fourth quarter of this year, was down 3.8%.

Lilly's stock has gained 52% in the year to date, while the S&P 500 SPX has gained 19.4%.

For more, read: Obesity drugs' next wave: These companies could snag 20% of GLP-1 market, analysts say

-Ciara Linnane

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10-03-24 1034ET

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