The LY.US (LLY.US) new drug combination Wegovy has a good weight loss effect! Damo Song Duo: The stock price is expected to rise 46%

The Zhitong Finance App learned that on June 23, local time, data released by LLY.US (LLY.US) at the American Diabetes Association (ADA) conference in Chicago showed that its experimental drug Bimagrumab can help patients maintain muscle mass while losing weight after being used in combination with Novo Nordisk (NVO.US) GLP-1 diet drug WegoVy (simeglutide). The study found that patients receiving a combination of Bimagrumab and Wegovy lost 22.1% of their body weight after 48 weeks, with 92.8% of the weight loss coming from their own body fat. In contrast, the test patients using Wegovy alone lost 15.7% of their body weight, and 71.8% of their weight loss came from their own body fat. This suggests that patients who use Wegovy alone lose more lean muscle mass compared to the combination regimen.

In response, Morgan Stanley released a research report saying that from an overall perspective, they are encouraged by this study data. Compared with Wegovy alone, this combination therapy has a better weight loss effect and accounts for a higher proportion of fat in weight loss. In addition, it has also improved many cardiometabolic indicators.

According to Daimo, the safety/tolerability of this combination therapy is better than expected. During the audience questioning session, some people were concerned about the rise in low-density lipoprotein (LDL) cholesterol (which is mechanically predictable and is considered temporary). One panellist indicated that this can be controlled by taking statins. The incidence of muscle cramps is high (around 60%), but they are described as mild, and researchers say patients did not significantly complain about this during the trial. The incidence of diarrhea and nausea due to combined treatment was also slightly higher than with Wegovy's monotherapy. Serious adverse events (SAEs) were rare, including pancreatitis and skin cancer, but these events were distributed across test groups. Additionally, bimagrumab also causes early and brief elevations in ALT (alanine aminotransferase) and lipase.

Damo pointed out that Eli Lilly is carrying out a phase II trial of combining Bimagrumab and tirzepatide to treat obesity and/or type 2 diabetes, but the specific data release date has not yet been disclosed (it is planned to release data for obese people in April 2026, and data for obesity+T2D people in October), and is further developing subcutaneous injection (SQ) preparations.

Early doctors' feedback suggests that this combination therapy may be suitable for older patients taking GLP-1 drugs, who are more likely to lose muscle mass due to age factors. In the ADA panel discussion, doctors pointed out that “sarcopenic obesity” (sarcopenic obesity) is the most obvious indication for this combination, and also expressed interest in MASH (metabolism-related steatohepatitis) and knee arthritis indications.

Damo said the bank rated Eli Lilly's stock as an “increase in holdings,” and the target price for 12 months was 1,133 US dollars. This target price has about 46% upside compared to the stock's closing price of $778.08 on June 24. According to Damo, the target price is based on Eli Lilly's earnings per share (EPS) forecast of $37.76 from the second quarter of 2026 to the first quarter of 2027, with an estimate of 30 times the price-earnings ratio (P/E) ratio. This valuation multiplier is higher than Lilly's average for the past 10 years (28 times) and the industry average (about 15 times), but given its growth prospects and flexibility in the R&D pipeline, the bank believes the valuation is reasonable.

Furthermore, Damo pointed out that the upward risks faced by Eli Lilly's stock include: the clinical or commercial performance of the oral small molecule GLP-1 drug Orforglipron exceeded expectations; Tirzepatide achieved positive results in obesity outcome studies to open up new markets; and Eli Lilly's early resolution of the supply of autoinjectors. The downside risks faced by the stock include: Orforglipron being terminated before listing; Tirzepatide's performance in obesity treatment falling short of expectations; and competitors releasing better data in diabetes+obesity drug development.