2. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders In Q3 2024: 106
Date of Cramer’s Comments: 8-20-24
Performance Since Then: -18.28%
Eli Lilly and Company (NYSE:LLY) has been the star of the pharmaceutical industry over the past year or so due to its weight loss drugs. However, with the weight loss drug industry now facing entry of low-cost options, the stock has been under pressure. Year-to-date, Eli Lilly and Company (NYSE:LLY)’s shares are up by 31% but they have lost 15% over the past six months. Within the six-month performance, two dips are particularly notable. One of these saw the stock drop by 14% in the first week of November after Eli Lilly and Company (NYSE:LLY)’s Mounjaro and Zepbound sales of $3.11 billion and $1.26 billion in Q3 fell short of analyst estimates of $4.20 billion and $1.69 billion. Here’s what Cramer said in August:
“Eli Lilly (LLY) has announced that its novel weight loss and diabetes drug can reduce the risk of developing type 2 diabetes by 94%—and that’s not in the general population but among pre-diabetic adults who are already prone to it. Add this drug’s ability to aid in weight loss, and we’re likely moving toward a future where people are less concerned about diet and exercise. After all, what they’re doing now isn’t working as well as Lilly’s tirzepatide.
“People often lack the discipline and willpower to maintain diets and workout regimens, which contributes to obesity and type 2 diabetes—a serious condition we hear so much about. While we’ve heard about revolutionary GLP-1 drugs for some time, there was always skepticism about their long-term performance. However, the results from the 176-week trial on Lilly’s tirzepatide are game-changing in the fight against diabetes. The average patient lost 23% of their body weight, which makes it more likely that the FDA will approve the drug for widespread use.
“With no real alternative, it’s hard to see how insurance companies can avoid covering these GLP-1 drugs. I feel more optimistic about this after David Ricks, CEO of Eli Lilly, mentioned this morning on Squawk on the Street that the drug will save the healthcare system a lot of money. The initial question was whether these drugs, including tirzepatide—a dual-acting GLP-GIP inhibitor—not only keep you thinner but also healthier. We’re beginning to see that they do. Even though the federal government doesn’t cover these drugs, and many employers don’t either, they should. This will save money for our country in the long term and promote healthier, longer lives.
“I’ve been a huge supporter of Eli Lilly for ages, and it remains a major position in the Trust. This news will likely attract new believers. David’s assurance that they’re working on various formulations—such as pill forms, monthly shots, and multi-dose injectables—shows their commitment. They’re investing $18 billion to build manufacturing facilities for these drugs, a feat few other companies can afford. While competitors may have something up their sleeves, right now, Lilly is the clear leader, with Novo Nordisk in second place. The rest are still stuck in the FDA approval process, which could take years.
“Lilly started this journey back in 2016, and the competition is nowhere near catching up. There’s a significant misunderstanding about what this drug can achieve. It’s not just for weight loss and diabetes; it will be prescribed for conditions like congestive heart failure, liver disease, hypertension, and more. It might even become a treatment for alcoholism and sleep apnea. That’s why I believe Eli Lilly, currently worth $92 billion, could eventually join the trillion-dollar club.
“Everyone is searching for a drug company that can challenge Lilly, but Lilly’s deep moat and protection from competition make it hard to beat. Although the stock didn’t close above its previous highs today—potentially signaling a double top—I urge you to think bigger. One day, we’ll recognize that tens of millions of people have been freed from the constraints of diet and exercise regimens, thanks to Eli Lilly.”
