:max_bytes(150000):strip_icc()/GettyImages-2126120470-4b91f7120b0a450f8c9a674333f424cc.jpg "Why a Pair of Eli Lilly Clinical Trials Sent ResMed Stock Tumbling")
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Key Takeaways
- ResMed shares fell sharply in intraday trading Monday following the release of clinical trial data from Eli Lilly Friday afternoon.
- Trials from Eli Lilly indicated that its weight-loss drug Zepbound is effective at reducing the severity of sleep apnea among obese patients without the use of a traditional sleep apnea mask.
- Masks and other medical devices make up the bulk of ResMed’s sales, and the company has said it sees a positive correlation between patients who use a GLP-1 weight-loss drug and also use sleep apnea masks.
Shares of medical device maker ResMed (RMD) are tumbling in intraday trading Monday as markets react to a pair of Phase 3 clinical trials from drugmaker Eli Lilly (LLY) released Friday that could have an impact on ResMed’s future business.
Friday afternoon, Eli Lilly released data from two clinical studies that showed the capability of one of the company’s popular weight-loss drugs, Zepbound, to reduce the severity of sleep apnea without the need for a mask that is typically used to treat the disease.
Why ResMed Is Slipping Monday
Sleep apnea is ResMed’s primary area of treatment, according to its own earnings materials. The company sells medical devices like sleep apnea masks, and generated about $1.2 billion in revenue, mostly from device sales, in its most recent quarter.
ResMed said in its most recent earnings report that its data shows a positive correlation between patients who already use a GLP-1 weight-loss drug, like Zepbound or Novo Nordisk’s (NVO) Ozempic, also seeking treatment for sleep apnea like a sleeping mask. That means the market that Eli Lilly or other GLP-1 providers could take from companies like ResMed is sizable if the weight-loss drugs can reduce the severity of sleep apnea without needing a mask.
Lilly’s studies follow another in April that also found that Zepbound reduced the number of times a sleeping patient’s airflow was restricted. The company said in Friday’s release that it has submitted the drug to the Food and Drug Administration (FDA) to get sleep apnea added to the label as a condition Zepbound can treat, and said it expects “regulatory action” as early as the end of 2024.
ResMed stock is down 11% to $182.93 as of 10:30 a.m. ET Monday. Eli Lilly shares are up 0.5% to $888.88.