Here's a list of weight-loss drugs in development and awaiting approval to take on Ozempic

Published Wed, Jun 28 202310:32 AM EDT

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

It's been a busy few days in the obesity-and-diabetes drug industry, with Club holding Eli Lilly (LLY) and its main rival Novo Nordisk (NVO) publishing potentially game-changing trial results. And our conviction in Eli Lilly's ability to be a leader in the nascent weight-loss market has only strengthened. Eli Lilly's next-generation obesity drug delivered the most weight loss seen in a clinical trial to date, according to results published Monday in the New England Journal of Medicine . Trial participants who took the highest dose of retatrutide lost an average of 24.2% of their body weight over a 48-week phase-2 trial. At the time the Lilly-funded trial ended, patients had not seen their weight loss plateau, suggesting further reductions could occur in longer studies that are getting underway. The retatrutide results were the latest in frenzy of obesity-and-diabetes drug data released during the annual American Diabetes Association conference in San Diego. On Friday, at the start of the conference, Eli Lilly published encouraging results for its oral obesity drug , which is beginning late-stage studies. The company's chief rival, Denmark-based Novo Nordisk (NVO), also published promising data on drugs in its pipeline, including its own oral weight-loss treatment. Other pharmaceutical companies are racing to compete with Novo Nordisk and Eli Lilly, including Amgen (AMGN) and Pfizer (PFE). However, Pfizer on Monday said it was ending development of an experimental obesity pill amid safety concerns . Drugmakers and Wall Street alike have high expectations for the obesity-drug market, with annual sales potentially growing to $100 billion over the next decade, Reuters has reported. Barclays on Tuesday projected Eli Lilly's three leading obesity-and-diabetes drugs could generate nearly $49 billion in combined sales in 2030. Eli Lilly's companywide sales are expected to total $31.3 billion this year, according to FactSet. To be sure, there's been plenty of excessive hype around weight-loss and diet drugs in previous decades, including in the late 1990s when U.S. regulators banned a combo treatment known as fen-phen over heart side effects. The class of incretin drugs that's fueling optimism now — known broadly as GLP-1s — are known to cause side effects including nausea and vomiting; increases in heart rate also have been associated with the drugs. And last month, European regulators took a safety step to keep a closer eye on a potential link between GLP-1s and thyroid cancer. But, ultimately, GLP-1s work differently than failed diet drugs of the past. The treatments mimic a gut hormone that, when released, can suppress appetite. Lilly's Mounjaro and retatrutide target additional hormones that control blood sugar, as well. Pharmaceutical companies hope that GLP-1s will prove to be effective at not just causing patients to lose considerable percentages of their body weight, but also reduce weight-related health conditions such as sleep apnea and heart disease. Eli Lilly and Novo Nordisk are both conducting clinical trials on those secondary impacts. Demonstrating those additional benefits could help convince health insurers to meaningfully cover weight-loss drugs — a crucial step in reaching their commercial sales potential, Geoff Meacham, analyst at Bank of America, told CNBC recently. Novo Nordisk currently dominates the GLP-1 market, with Eli Lilly as its most formidable competitor. Bigger picture, JPMorgan analysts said Tuesday they see the market "largely remaining a duopoly" in the coming years, especially after Pfizer's setback. Eli Lilly Eli Lilly has multiple drugs in development that fall under the GLP-1 umbrella in various stages of clinical development. In general, they all are being studied as both weight-loss and type-2 diabetes treatments. The one that's furthest along is known by the scientific name tirzepatide, which received Food and Drug Administration approval to treat type-2 diabetes in May 2022 .Sold under the brand name Mounjaro, the drug targets two hormones to improve the body's blood sugar control: GLP-1 and GIP. It's administrated through an under-the-skin injection once per week. Clinical trials showed the drug also helped patients to lose weight. By year-end, Eli Lilly expects to receive FDA approval to market tirzepatide specifically as a weight-loss treatment — meaning people who don't have type-2 diabetes could be prescribed the drug. A large, phase-3 study found patients on the highest dose of the drug lost an average of 22.5% of their body weight over a 72-week period. In obese or overweight patients who also had type-2 diabetes, a trial showed weight loss up to 15.7%, the company said in April . Eli Lilly has invested heavily to expand manufacturing capacity to meet demand ahead of the expected obesity launch. Wall Street sees sales of tirzepatide for both type-2 diabetes and obesity growing to roughly $12 billion in 2024, up from around $3.3 billion this year, according to FactSet. The obesity-and-diabetes drug is key to the Club's investment thesis in Eli Lilly. Jim Cramer has said it could become the best-selling drug of all-time . LLY 1Y mountain Eli Lilly's stock performance over the past 12 months. Eli Lilly's next-gen GLP-1 drugs are earlier in development, with phase-3 studies in the process of ramping up. The experimental drug orforglipron is important to Lilly's pipeline because it's taken orally instead of through injection, which the company hopes could broaden its appeal to more people. Unlike Mounjaro, orforglipron targets only the GLP-1 hormone, potentially limiting its weight-loss efficacy. The data released Friday showed people who took the highest dose of orforglipron lost 14.7% of their body weight . Equity analysts generally viewed the results favorably. But Wall Street was even more upbeat on Monday's retatrutide data, which set "a new bar of efficacy for the class," according to BMO Capital Markets analyst Evan David Seigerman. The main differentiator for retatrutide is that it targets three incretin hormones — GLP-1, GIP and glucagon. Orforglipron and retatrutide are both years away from hitting the commercial market — Morgan Stanley estimates launches in 2026 and 2027, respectively, assuming positive phase-3 results — but they represent Eli Lilly's best chances to remain a leader in the industry and fuel growth into the 2030s. Novo Nordisk Novo Nordisk currently dominates the market for GLP-1 drugs, with three products in the class on the U.S. market already: Ozempic, Wegovy and Rybelsus. All three drugs share the scientific name semaglutide, which targets only the GLP-1 hormone. Ozempic is a once-weekly injection to lower blood sugar levels in adults with type-2 diabetes. It was first approved by the FDA in 2017. In January 2020, the FDA expanded its label , granting Ozempic approval to reduce the risk of heart attacks and strokes in type-2 diabetes patients with known heart disease. The FDA cleared semaglutide to specifically treat obesity in June 2021. It's marketed under the brand name Wegovy for this use. In a large-scale trial , Wegovy reduced body weight by up to 15% in recipients without diabetes over a 68-week period. Novo Nordisk has struggled to keep up with surging demand for Wegovy , but has been working to scale up manufacturing capacity. Wall Street expects Wegovy and Ozempic sales to total nearly $17 billion in 2023, according to FactSet. NVO 1Y mountain Novo Nordisk's 12-month stock performance. Rybelsus is the brand name for the pill version of semaglutide. The FDA approved the drug to improve blood-sugar control in 2019. On Sunday, Novo Nordisk presented phase-3 data showing that Rybelsus helped obese or overweight adults lose up to 15% of their body weight over a 68-week period. The company plans to file for FDA approval to market the drug for obesity by the end of the year. Further into Novo Nordisk's pipeline, the company has underway a large-scale study investigating a two-drug combo called CagriSema. It combines semaglutide and another compound known as cagrilintide. Mid-stage studies indicate the combination drug was better at improving blood-sugar control and inducing weight loss than the compounds were individually. (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. 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An Eli Lilly and Company pharmaceutical manufacturing plant is pictured in Branchburg, New Jersey, on March 5, 2021.

Mike Segar | Reuters