Eli Lilly is Going to Make America Skinny

Indianapolis, Indiana—the healthcare capital of the world.

Not Boston, not San Francisco, not New York City—the Midwest is the cradle of healthcare innovation.

And what healthcare innovation is happening? Weight loss drugs—America’s appetite is limitless!

And no American drug company (I’m ignoring Ozempic maker Novo Nordisk, HQ’d in Denmark) is doing it better than Indiana’s very own, Eli Lilly.

Eli Lilly’s obesity drug, Mounjaro, has pushed the company into rarified air. And this is no scrappy start up—the company was founded in 1876.

Since the 1970s, Eli Lilly’s stock has compounded at 13.5% annually for a total return of 84,000%. Compare that to the S&P 500’s 7.4% annual return during that time.

Lilly reported earnings results yesterday and investors loved what they heard.

The stock was up 15% (it’s best single day return in decades) and Lilly is now the 10th largest company in the U.S.

Indianapolis, and Omaha (s/o Buffett), stick out like a sore thumb on this list full of Silicon Valley zip codes.

Lilly has a lot of strong drug franchises, but Mounjaro is the one stealing America’s heart and making us skinny.

Mounjaro sales were $980 million in the quarter, beating FactSet estimates of $740 million. Markets are usually very efficient and Mounjaro didn’t exactly sneak up on everybody (the WSJ wrote a feature article on it a month ago), so beating estimates by that much is notable.

But the sales growth isn’t even the craziest part. Mounjaro is not even FDA approved to treat obesity—it’s intended to treat people with Type 2 diabetes.

But everyone wants it to help them lose weight.

Charles Barkley (a type 2 diabetic) recently did an interview with Pat McAfee where he professed his love for Mounjaro. In his words:

"I started at 352 pounds. And I'm down to 290. I'm starting to feel like a human being, not a fat ass anymore. My doctor told me, she says, there's a lot of fat young people. Ain't a lot of fat old people, they're all dead."

Chuck’s always going to tell you how it is.

So how does a diabetes drug help people lose weight? According to Concierge MD:

It works as a GLP-1 receptor agonist, which helps control blood sugar levels while promoting satiety and helping users feel full faster. It also helps reduce cravings and increases energy levels.

In short, it suppresses your appetite and makes you feel more full.

According to Barron’s, a recent trial of patients without diabetes who took Mounjaro lost 21% of their body weight on average. The FDA is expected to rule on Lilly’s application for approval of Mounjaro as an obesity treatment by the end of the year.

Using CDC data, the U.S. obesity prevalence was nearly 42% as of March 2020. In 2000, that number was only 30% so obesity has been a fast growing problem.

And it’s one that needs solving. Or at the very least, the numbers need to stop growing so rapidly. It creates major problems for the healthcare system, and more importantly, it makes it hard to live an enjoyable life.

Eli Lilly’s president had this to say on the earnings call:

“When you look overall, there are 236 obesity-related health complications. To name a few, obesity increases the risk of type 2 diabetes by 243%, coronary heart disease by 69%, hypertension by 113%, dyslipidemia by 74%. The overall cost of obesity-related complications and comorbidities are massive, accounting for $370 billion in direct medical cost, over $1 trillion in indirect annual costs in the U.S. People living with obesity or overweight drive 2.7 greater healthcare costs than normal-weight individuals.”

Assuming the FDA approves Mounjaro for weight loss, it could go along way in improving lives.

McAfee asked Barkley towards the end of the interview, "Do you know what it's (Mounjaro) doing to you exactly?"

His response:

"I have zero idea what it does!" Barkley said, laughing.

American dynamism is alive and well. Mounjaro: just shut up and give it to me!

Disclaimer: I don’t own any Eli Lilly stock and have no clue if Mounjaro has side effects that will have negative health implications. I’m also not a Mounjaro patient (customer?) … though maybe I should be as every time I step on one of those weird BMI scales at a rest stop it tells me I’m 20-30 pounds overweight. I only wrote about this topic because it seems to have captured the cultural zeitgeist and I wanted to learn a little more about it. Consult with a medical professional (or at least WebMD) before using weight loss drugs.