Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Market pressure : The major stock benchmarks were moving lower Wednesday, with the Dow getting the worst of it again. Adding pressure on equities, bond yields moved higher following a poor auction of $44 billion worth of 7-year Treasury notes. Nvidia was bucking the overall market decline, but its modest gain was much cooler than the incredible march higher over the past three sessions after last week’s earnings. American Airlines shares sank roughly 15% after a company sales strategy backfired and the carrier cut growth guidance. Sector watch : All of the S & P 500 sectors were under pressure Wednesday, led by energy and utilities. Tech has been flirting with positive territory as Nvidia, which opened lower, reversed to the upside. Fellow Club names Apple and Microsoft were also in the green. Combined, the three account for nearly 49% of the tech sector index. Apple and Nvidia, our two “own, don’t trade” stocks were also the top performers among the entire 33 stock Club portfolio. Deal movers : ConocoPhillips has agreed to buy Marathon Oil in a $17 billion all-stock transaction. Marathon shares rose about 7.5%, while Conoco stock fell roughly 4%. Additionally, Hess shareholders approved the company’s pending merger with Chevron . And, Merck has reached a deal to acquire privately held Eyebiotech for $1.3 billion in cash. Banking news : Here’s a dispatch from our Investing Club reporter Morgan Chittum about what Wells Fargo CEO Charlie Scharf said Wednesday at Bernstein’s 40th annual Strategic Decisions Conference: Scharf said Wells Fargo has been focusing on investment banking in a “very, very targeted way.” There were several mentions of the bank’s quiet hiring spree to beef up its Corporate and Investment Banking (CIB) division, which we reported on last week . Building out lucrative underwriting and advisory fee capabilities is “staring us in the face,” he added, as long-dormant IPO and M & A activity have started to perk up. Expanding Wells Fargo’s Wealth Management franchise, another fee-based revenue stream is “one of the bigger opportunities” ahead, Scharf said. The bank has around 12,000 advisors and is better positioned than in years past, the CEO added. We have been encouraged by Wells Fargo’s push to boost fees business lines. Scharf said Wells Fargo remains focused on efficiency. The bank has cut staff to 225,000 from 275,000. “The conversation around efficiency is less [about] saving money and it’s more about how do we run a better company,” he added. When the Federal Reserve at some point removes its asset cap on Wells Fargo, Scharf said corporate lending and trading will be areas of growth for the bank. He said he dialed back those areas to stay under the Fed’s $1.95 trillion limit. “When you turn a consumer away, they’ll remember that forever,” Scharf said. Businesses understand and can be won back, he added. The CEO believes it’s just a matter of time before the asset cap is lifted and so do we. Scharf said Wells Fargo was able to get a key regulatory penalty removed back in February by stripping away things like certain incentive plans at branches. The so-called consent order was tied to the bank’s 2016 fake accounts scandal that predated Scharf. There are still several other orders outstanding. Quick hits : The FDA granted accelerated approval for Club name Eli Lilly ‘s Retevmo, which is used to treat certain kinds of advanced or metastatic medullary thyroid cancer in children two and older. Twelve years and older was the prior age threshold. Elsewhere, shares of HubSpot were bucking the broader market decline on further speculation that Club name Alphabet is indeed considering an acquisition. CNBC’s David Faber believes that should a deal occur, it would be all-stock. Up next : Salesforce is set to report earnings after Wednesday’s closing bell. AI monetization commentary and what the team has been seeing in terms of cross-selling opportunities will be key watch items. Foot Locker and Best Buy report before the bell Thursday. Costco is out with results Thursday evening. That will do it for Club name earnings, except for Broadcom, which is set to report next month. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.
When stocks are in steep uptrends, it can difficult be difficult to determine when a meaningful corrective move is going to take place. We all want to capture as much of the uptrend as possible, especially when momentum is strong, but there is risk inherent to steep uptrends, which makes it important to have a “sell discipline” for profit taking. We have seen many steep uptrends take hold in this momentum-driven tape, especially in some of the market’s largest stocks like Microsoft, Nvidia, Amazon, Meta, Berkshire Hathaway, Eli Lilly, Broadcom and JPMorgan Chase. Therefore, it is important to have a plan for how to deal with stocks that have “gone parabolic,” meaning the momentum behind their uptrends has accelerated. A 20-day moving average (MA) can be helpful as a gauge of short-term momentum, in general. It is especially useful in helping us stay on the right side of steep uptrends. Two examples of steep uptrends are Meta (Meta) and Nvidia (NVDA) , both of which are pictured below. Quite simply, when the 20-day MA is pointing higher, as it is currently for NVDA and META, it supports holding existing exposure. When the 20-day MA turns lower after having pointed higher for a long period of time, it is a sign that momentum is waning and that the stock is due for a significant pullback. Looking back, for both NVDA and META, the 20-day MA rolled over in early August 2023, which preceded intermediate-term corrective phases in the third quarter of last year. We include the Ichimoku cloud model on the charts because it can be a good gauge of initial downside risk in steep uptrends. The cloud worked particularly well on the chart of META during its corrective phase, and it resulted in initial support discovery for NVDA in early August at the onset of its correction. The 50-day MA is another helpful way to gauge initial support in uptrending stocks. As a general rule, we advise reducing partial exposure when the 20-day MAs roll over after steep upmoves. The percentage reduction should keep in mind how the stock fits into an overall portfolio. A breakdown below support from the cloud model and/or 50-day MA can be a catalyst to sell stocks, often with the intention of revisiting them once they become oversold again from an intermediate-term perspective. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . DISCLOSURES: THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. 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Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Friday’s key moments. 1. U.S. stocks declined Friday as investors interpreted hot inflation data. Investors weighed the odds that the Federal Reserve may take even longer to deliver interest rate cuts in 2024, pushing bond yields higher. The p roducer price index (PCI) print came in hotter-than-expected, but that doesn’t mean the downward trend in inflation is over. More important economic data is on the horizon. We’re waiting for the central bank’s closely-watched personal consumption expenditures (PCE) report next week. 2. Wall Street made a huge call on Eli Lilly stock. Morgan Stanley bumped the healthcare name’s price target to a Street high of $950 apiece from $805 apiece. Analysts speculated that Eli Lilly could be the first $1 trillion biopharma stock, citing huge upside for sales in medicines like Mounjaro and Zepbound. We’re upbeat on research that highlights the company’s massive growth prospects. Shares climbed 3.62% after the opening, notching a new 52-week high. 3. We received some positive updates on Wells Fargo on Thursday. The Office of the Comptroller of the Currency terminated a 2016 consent order linked to the bank’s fake accounts scandal. This is the sixth consent order that regulators have terminated since 2019, which indicates the firm’s turnaround plan is working. Still, it’s too early to talk about Wells Fargo’s asset cap being lifted though â likely a 2025 story âbut it’s definitely a step in the right direction. Wells Fargo stock surged 7% on the announcement, hitting a new 52-week high on Thursday. Now that the financial name accounts for roughly 5% of the portfolio, we’re leaning towards right sizing and making a small sale of shares. (Jim Cramer’s Charitable Trust is long WFC, 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. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
CNBC’s Jim Cramer on Friday told investors what to watch for on Wall Street next week, highlighting JPMorgan‘s market-moving health-care conference in San Francisco. Taking place from Monday to Thursday, the conference is one of the year’s largest gatherings of major industry CEOs where they reveal earnings guidance and updates on clinical trial research.
“The new year has started with a redistribution of cash out of the ‘Magnificent Seven’ and on to the sidelines,” Cramer said, pointing to health-care stocks as a particularly notable group that will likely be “propelled by what people expect to hear from the JPMorgan Healthcare Conference.”
Cramer will interview several CEOs at the conference, starting with Walgreens CEO Tim Wentworth on Monday. Cramer said he’s interested to hear how the company plans to get its groove back after cutting its dividend nearly in half this week. Cramer will also speak with leadership from Amgen and Medtronic, as well as the new CEO of Bristol Myers, Chris Boerner, whom he’ll ask about the company’s rigorous biotech acquisition plans.
On Tuesday and Wednesday, Cramer will continue to interview the CEOs of major industry names, including Eli Lilly CEO David Ricks. Cramer said he’s particularly interested in the company’s diabetes and weight loss drug as well as its Alzheimer’s initiative. He’ll also speak with CVS Health CEO Karen S. Lynch to discuss the company’s ongoing transition from drug store to health-care provider. Cramer will also hear from the CEOs of Pfizer, Regeneron, Novartis, Abbott Labs and Cencora.
Thursday brings the consumer price index for December. Cramer said he thinks those hoping for soft figures will be disappointed. Cramer will also be tuning into CES, the Consumer Electronics Show, next week. The tech event will include commentary by leadership from Nvidia and Dell.
Earnings season kicks off Friday with reports from major banks including JPMorgan, Bank of America and Wells Fargo. BlackRock will also report, and Cramer said he thinks the company’s earnings could give investors a solid overview of the financial industry. He’ll also be paying attention to Friday reports from UnitedHealth Group and Delta.
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Eli Lilly.
The drugmaker observed high rates of adverse side effects, which were mostly mild and gastrointestinal, among patients. A significant share of patients alsostopped taking the drug.
“At this time, twice-daily danuglipron formulation will not advance into Phase 3 studies,” the company said.
But Pfizer said it still plans to release phase two trial data on a once-a-day version of the drug in the first half of 2024, which will “inform a path forward.” The pharmaceutical giant will wait to see that data before deciding whether to start a phase three study on the once-daily pill, which Wall Street views as the more competitive form of the treatment.
Shares of Pfizer fell 4% in premarket trading Friday after it announced the trial results.
Still, the data on the twice-daily drug is a blow to Pfizer’s hopes to win a $10 billion slice of the booming weight loss drug market, which CEO Albert Bourla has said could grow to $90 billion. The company is betting on a successful weight loss pill to help it rebound from plummeting demand for its Covid products and a roughly 40% share price drop this year.
But investors have been pessimistic about Pfizer’s potential in the weight loss drug space since the company scrapped a different once-daily pill in June and proceeded with the less attractive danuglipron. Now, Friday’s data puts Pfizer even further behind the dominant players in the weight loss drug market, Eli Lilly and Novo Nordisk, which are racing to develop more convenient pill versions of their blockbuster weight loss and diabetes injections.
Pfizer’s phase two trial on its twice-daily pill followed around 600 obese adults who did not have Type 2 diabetes. The trial examined the drug’s effect on weight loss after 26 or 32 weeks, at different dosage amounts ranging from 40 milligrams to 200 milligrams.
Like Novo Nordisk’s Wegovy and Ozempic, Pfizer’s pill works by mimicking a hormone produced in the gut called GLP-1, which signals to the brain when a person is full.
Pfizer said the trial on danuglipron met the primary goal of demonstrating “statistically significant” reductions in body weight.
Patients who took the pill twice a day lost 6.9% to 11.7% of their body weight on average at 32 weeks, and from 4.8% to 9.4% at 26 weeks.
Meanwhile, patients on a placebo gained 1.4% of their body weight at 32 weeks and 0.17% at 26 weeks.
When adjusting for the difference between the weight gain observed in patients who took the placebo, Pfizer’s twice-daily pill caused 8% to 13% weight loss on average at 32 weeks and 5% to 9.5% at 26 weeks.
The company said high rates of adverse events were observed among patients in the study, with up to 73% experiencing nausea, up to 47% vomiting and up to 25% experiencing diarrhea. More than 50% of patients across all dose sizes stopped taking the pill, compared to roughly 40% among those on the placebo, according to Pfizer.
No new safety issues were observed, and danuglipron was not associated with increased liver enzymes like Pfizer’s other discontinued weight loss pill.
Data from the phase two trial will be presented at a future scientific conference or published in a peer-reviewed journal.
The tolerability issues align with some analysts’ predictions ahead of the data release.
Leerink Partners analyst David Risinger wrote in a Monday note that the proportion of patients who discontinue treatment with Pfizer’s twice-daily danuglipron in the phase two trial would likely be higher than those who stopped taking a once-daily pill from Eli Lilly.
By comparison, 10% to 21% of patients who took Eli Lilly’s pill, orforglipron, in a mid-stage trial discontinued the treatment at 32 weeks due to adverse side effects, he noted.
Risinger said that’s likely because danuglipron’s total daily dose is far higher, which may cause more adverse effects. Patients on the highest dose size of Pfizer’s pill took 400 milligrams each day, while those on the highest dosage of Eli Lilly’s drug took 45 milligrams a day.
Pfizer’s phase-two trial also didn’t allow downtitration, or decreasing the dose of a drug over time once a specific response has been achieved. Eli Lilly’s mid-stage trial on its pill did.
There is hope that patients will better tolerate the once-daily version of danuglipron compared to the twice-daily form. Pfizer appears to believe a once-daily version of the drug could lessen gastrointestinal side effects, according to some analysts.
They pointed to Pfizer’s second-quarter earnings call, when the company’s chief scientific officer, Mikael Dolsten, suggested that a once-daily version may improve a patient’s tolerability of the drug, which could lessen the gastrointestinal side effects “that have been seen as limiting” danuglipron.
But the effects will be unclear until the mid-stage trial data is released next year.
Notably, the weight loss caused by twice-daily danuglipron appeared to fall short of analysts’ expectations.
Ahead of the data release, several analysts said Pfizer’s twice-daily pill has to be about as effective as Eli Lilly’s once-a-day pill to be competitive. That means at least a 14% to 15% weight loss, Cantor Fitzgerald analyst Louise Chen told CNBC earlier this month.
Risinger also wrote in October that Pfizer’s danuglipron needs to show weight reduction in the “mid-teens” percentages to be considered competitive with Eli Lilly’s pill.
Obese or overweight patients who took 45 milligrams of Eli Lilly’s pill once a day lost up to 14.7% of their body weight, or 34 pounds, after 36 weeks, according to the company’s phase-two trial results.
Eli Lilly’s results appear consistent with the weight reduction caused by a high-dose oral version of Novo Nordisk’s semaglutide – the active ingredient used in the diabetes drug Ozempic and weight loss treatment Wegovy – but came over a shorter trial period.
More than 2 in 5 adults have obesity, according to the National Institutes of Health. About 1 in 11 adults have severe obesity.
Clarification: This story was updated to reflect that some weight-loss data was adjusted to include results from the placebo group.
Game-changing anti-obesity medications have posed nothing short of an existential crisis for Weight Watchers parent WW International since they arrived on the scene, but CEO Sima Sistani has been confronting this challenge head-on. Despite an 11% dive in the stock Friday, Morgan Stanley said it thinks the company “has gone through an incredible transformation over the past year,” and named the stock its top pick among small- and mid-cap internet stocks. “Sequence has quickly and profitably become one of the top players in the GLP-1 telehealth space while flipping WW’s GLP-1 bear case to a bull case,” analyst Lauren Schenk wrote in a research note Friday, referring to a telehealth platform WW agreed to buy in March. Sequence gives subscribers access to GLP-1 medications such as Novo Nordisk’s Wegovy and Ozempic. “With all eyes on the FDA upcoming action for [ Eli Lilly ‘s] Mounjaro/tirzepatide obesity label expansion (expected by [year-end]), there are catalysts that could unlock supply and help Sequence monetize the existing demand,” Schenk wrote. On Thursday, WW reported a deeper-than-expected decline in third-quarter revenue , and warned its annual sales would likely fall to the low-end of its forecasted range. Schenk said the concern about the drop in WW’s average revenue per user “seems overblown” and has created a buying opportunity for the stock. WW shares are up nearly 90% since the start of the year, but have dropped more than 30% over the past month. Schenk’s $13 price target implies the stock could rally 78% from Friday’s close. “We believe the lifetime value of [subscribers] acquired in 3Q was in line to better than expectations, but the cadence of recognizing that value is slightly longer,” she said. Stabilizing core business WW has been focused on stabilizing its core weight loss business. It is closing down its low-margin consumer products business, which sold snack bars, recipe books and other products. Also, during the latest quarter, more members took advantage of lower cost long-term memberships, which hurt revenue. Schenk said these steps are making the company’s marketing spending more efficient, which will help profits. Meanwhile, WW is working to develop Sequence after closing on the deal in April . At the end of the third quarter, it had 45,000 clinical subscribers. There has been huge interest in Novo and Lilly’s new class of appetite-suppressing weight loss drugs, which have proven to help patients shed pounds more quickly and easily. However, access to these drugs has been strained by several factors, including their high cost and limited supply. WW YTD mountain WW shares in 2023 Schenk said she was encouraged by the growth of Sequence subscribers despite the bottlenecks and thinks it bodes well for growth acceleration as shortages subside. This week, Lilly said it expected the Food and Drug Administration remained on track to approve tirzepatide for obesity by the end of the year. The company has been working aggressively to bulk up its manufacturing capacity , having seen the issues Novo Nordisk has had keeping its GLP-1 medications in stock. Since May, Novo has been restricting sales of the lower starting doses of Wegovy to ensure that patients already taking the drug have the supply they need to continue their treatment. Separately, Novo said this week it has been gaining ground in convincing insurance companies to cover the drug , which has a list price of around $1,350 per month. Both developments are a positive for WW’s Sequence business. Schenk estimates that around 6 million current or lapsed WW subscribers would qualify for treatment with obesity medication.
The top 10 things to watch Friday, Oct. 20 1. Will the yield on the 10-year Treasury breach 5% Friday, and how will markets react? U.S. stocks are down in premarket trading, with S & P 500 futures falling 0.27%, potentially leading to another disappointing week for equities. Stocks have been held back by high bond yields and strengthening oil prices. 2. American Express (AXP) reports a big third-quarter earnings beat Friday, with earnings-per-share (EPS) of $3.30, ahead of analysts’ forecasts for $2.94 a share. Revenue climbs by 13%, boosted by travel-and-entertainment spending. Millennial and Gen-Z spending rises by 18% in the U.S. 3. Oilfield services firm Schlumberger (SLB) misses slightly on revenue expectations for the third quarter, but beats adjusted EPS estimates by a penny. The company has reported nine-consecutive quarters of double-digit, year-over-year growth in its international business, and expects sequential revenue growth in the fourth quarter. 4. UBS assumes coverage on a handful of drug stocks, including Club name Eli Lilly (LLY). The bank designates Eli Lilly a buy, with a price target of $710 a share, saying it expects “meaningful upward revisions” for diabetes-and-obesity treatment Mounjaro . 5. Intuitive Surgical (ISRG) reports a mixed quarter, as the company continues to see pressure on its bariatrics business due to the rise in GLP-1 obesity drugs. This used to be the company’s largest source of procedure growth. 6. General Motors (GM) is reportedly close to reaching a tentative agreement with the United Auto Workers union that would resolve a month-long strike, which has also engulfed Club name Ford Motor (F) and Stellantis NV (STLA), according to Bloomberg. 7. Deutsche Bank upgrades Union Pacific (UNP) to a buy rating, while slightly raising its price target to $258 a share, up from $257. The firm cites improving U.S. rail volumes and increasing confidence around new CEO Jim Vena. 8. Wolfe Research upgrades Club holding Morgan Stanley (MS) to a neutral-equivalent rating from underperform, without a price target. Meanwhile, Wednesday’s post-earnings sell-off of the bank stock was an overreaction. 9. JPMorgan reiterates Club holding Amazon (AMZN) as its best idea in the internet sector on the expectation that revenue growth at cloud unit Amazon Web Services will accelerate in the second half of this year, while North American retail margins expand. 10. Goldman Sachs lowers its price target on Club name Walt Disney (DIS) to $125 a share, down from $128, while maintaining a buy rating on the stock. The firm asks: is the stock is now at the point of peak uncertainty? Sign up for Jim Cramer’s Top 10 Morning Thoughts on the Market email newsletter for free . (See here for a full list of the stocks at Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
1. Will the yield on the 10-year Treasury breach 5% Friday, and how will markets react? U.S. stocks are down in premarket trading, with S&P 500 futures falling 0.27%, potentially leading to another disappointing week for equities. Stocks have been held back by high bond yields and strengthening oil prices.
2. American Express (AXP) reports a big third-quarter earnings beat Friday, with earnings-per-share (EPS) of $3.30, ahead of analysts’ forecasts for $2.94 a share. Revenue climbs by 13%, boosted by travel-and-entertainment spending. Millennial and Gen-Z spending rises by 18% in the U.S.
3. Oilfield services firm Schlumberger (SLB) misses slightly on revenue expectations for the third quarter, but beats adjusted EPS estimates by a penny. The company has reported nine-consecutive quarters of double-digit, year-over-year growth in its international business, and expects sequential revenue growth in the fourth quarter.
4. UBS assumes coverage on a handful of drug stocks, including Club name Eli Lilly (LLY). The bank designates Eli Lilly a buy, with a price target of $710 a share, saying it expects “meaningful upward revisions” for diabetes-and-obesity treatment Mounjaro.
5. Intuitive Surgical (ISRG) reports a mixed quarter, as the company continues to see pressure on its bariatrics business due to the rise in GLP-1 obesity drugs. This used to be the company’s largest source of procedure growth.
6. General Motors (GM) is reportedly close to reaching a tentative agreement with the United Auto Workers union that would resolve a month-long strike, which has also engulfed Club name Ford Motor (F) and Stellantis NV (STLA), according to Bloomberg.
7. Deutsche Bank upgrades Union Pacific (UNP) to a buy rating, while slightly raising its price target to $258 a share, up from $257. The firm cites improving U.S. rail volumes and increasing confidence around new CEO Jim Vena.
8. Wolfe Research upgrades Club holding Morgan Stanley (MS) to a neutral-equivalent rating from underperform, without a price target. Meanwhile, Wednesday’s post-earnings sell-off of the bank stock was an overreaction.
9. JPMorgan reiterates Club holding Amazon (AMZN) as its best idea in the internet sector on the expectation that revenue growth at cloud unit Amazon Web Services will accelerate in the second half of this year, while North American retail margins expand.
10. Goldman Sachs lowers its price target on Club name Walt Disney (DIS) to $125 a share, down from $128, while maintaining a buy rating on the stock. The firm asks: is the stock is now at the point of peak uncertainty?
(See here for a full list of the stocks at Jim Cramer’s Charitable Trust.)
As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade.
THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Two experts see major challenges facing the adoption of new obesity drugs.
Dr. Kavita Patel, a physician and NBC News medical contributor, believes fresh data from Novo Nordisk on Ozempic’s ability to delay the progression of chronic kidney disease is among the strongest supporting evidence for secondary uses of the drug.
However, she considers data supporting the use of obesity drugs for other conditions including Alzheimer’s and alcohol addiction as underdeveloped.
“Those trials … are nowhere near as robust as the data we have on [Novo Nordisk trial] FLOW, on sleep apnea, cardiovascular risks, on diabetes control — double-blind placebo, randomized controlled trials that are incredible,” she told CNBC’s “Fast Money” on Wednesday. “We have a long way to go for that. I’ve seen a lot of miracle drugs before.”
Novo Nordisk halted FLOW on Tuesday. According to the company’s press release, it happened more than a year after an interim analysis showed that Ozempic could treat chronic kidney disease in Type 2 diabetic patients.
As of Friday’s close, Novo Nordisk is up 9.82%since itsannouncement. Its obesity drug maker competitor Eli Lilly is up 5.16% in the same period.
Patel believes efficacy is just one of the major hurdles the medication needs to clear before it can be approved for uses outside of diabetes management.
“We know this drug works really well in diabetics. But there are so many barriers to getting there —including cost, adherence, prescriber rate,” said Patel, who also served as a White House Health Policy Director under President Obama.
Patients opting to use GLP-1 drugs — a group of medications initially designed to control diabetes — for weight management often must pay out-of-pocket.
“Right now, we are seeing active employers, entire states that are declining to cover on the weight loss indication,” Patel said.
If the U.S. Food and Drug Administration approves Ozempic for use in Type 2 diabetics with chronic kidney disease, which Patel believes will happen, it could force the hand of insurance companies to expand their coverage of the drug.
“We’ll see a final package of data that will just be so compelling, that it would be wrong not to cover this, because it should be superior to what we have available to us,” she noted. “That is something that I think the insurance companies will have a difficult time [with].”
Mizuho Health Care Sector Strategist Jared Holz also expects challenges related to insurance coverage as more patients begin taking GLP-1 drugs, which could limit overall adoption.
“The payers, at some point, are going to be saying, ‘We get it, but we cannot pay for these at this volume without seeing the benefit, which may be 10 years from now, 20 years from now, 30.’ We have no idea when the offset is going to be,”he also told CNBC’s “Fast Money.”
Holz also pointed out the divide emerging in the health care sector between Novo Nordisk, Eli Lilly and their pharmaceutical peers.
“We haven’t seen this kind of valuation disconnect between the peer group, maybe in the history of the sector,” he said.
The growth trend may not be sustainable for Novo Nordisk and Eli Lilly, based on current supply constraints that have left patients unable to secure dosages.
“The companies can’t make enough, I don’t think, to actually put out revenue that’s going to appease investors, given where the stocks are trading,” said Holz.
A Novo Nordisk spokesperson did not offer a comment due to the company’s quiet period ahead of earnings. Eli Lilly did not immediately respond to a request for comment.
McCormick spices are displayed on a shelf at a supermarket on March 28, 2023 in San Anselmo, California. Spice Maker McCormick reported better-than-expected first quarter earnings with revenues of $1.57 billion compared to $1.52 billion one year ago.
Check out the companies making headlines in midday trading.
Warby Parker — The eyewear maker popped 6% after Evercore ISI upgraded shares to outperform from in line. The firm said 2024 should be a “fundamental inflection year” for Warby Parker.
Trex — Shares of the wood-alternative decking manufacturer declined by 3.9% even after Goldman Sachs initiated Trex with a buy rating. The bank said the company is “well-positioned” to drive growth and profitability.
Eli Lilly, Point Biopharma — Eli Lilly shares slumped 3.7% after the pharmaceutical giant announced plans to purchase cancer therapy developer Point Biopharma for $12.50 a share in cash, or about $1.4 billion. Point Biopharma shares surged more than 85%.
Rivian Automotive — Shares of the electric vehicle maker lost 5%, even though Rivian’s deliveries topped estimates and showed sustained demand. Morgan Stanley earlier reiterated the company as overweight, saying the Rivian’s FY23 production guide of 52,000 units supports the firm’s delivery forecast of 48,000 units. Concerns remain about softening demand for EVs in the U.S. due to higher borrowing costs.
Airbnb — The short-term vacation rental company fell more than 5% after KeyBanc downgraded the stock to sector weight from overweight. KeyBanc said that AirBnb’s margins will be squeezed as post-pandemic travel demand eases.
McCormick — Shares of the spice maker slipped 9% after McCormick reported earnings of 65 cents per share, excluding items, for the recent quarter on revenues of $1.68 billion. That came in roughly in line with the earning-per-share of 65 cents and $1.7 billion in revenue expected by analysts polled by StreetAccount.
Meta — Shares of the social media behemoth slipped more than 2% following news that the company is considering charging European Union Facebook and Instagram users a $14 monthly fee to access both platforms without ads.
Fiverr International — Shares gained 2% after Roth MKM upgraded the company to buy from neutral. The Wall Street firm is “incremental positive” on the stock, citing a freelancer survey that supports Fiverr’s leading position among gig workers.
Weight loss drugs are being assessed for their ability to treat conditions like dementia and addiction after a landmark study showed that Wegovy helped reduce the risk of heart attacks and strokes.
Bloomberg | Bloomberg | Getty Images
LONDON — Scientists have begun investigating whether so-called miracle obesity drugs could be used to treat conditions such as dementia and alcohol addiction after recent trials pointed to the drugs’ efficacy in treating serious health issues.
Late-stage trial data released last month by Novo Nordisk indicated that its Wegovy weight loss injection led to “large reductions” in heart failure-related symptoms among at-risk patients.
It comes weeks after the Danish pharmaceutical company published the results of its much anticipated “SELECT” study, which showed the drug’s role in reducing the risk of major cardiovascular events such as heart attacks or strokes.
The findings mark a major milestone as the company seeks to broaden perceptions of its product — dubbed by some a “vanity drug” — and researchers are hopeful they spell positive news for the drugs’ other applications.
“The results show that this medication can have health benefits above and beyond the short-term,” Christian Hendershot, director of the clinical and translational addiction research program at the University of North Carolina at Chapel Hill, told CNBC via Zoom.
Hendershot is one researcher investigating whether the appetite-regulating mechanisms at play in weight loss drugs could be used to treat other conditions such as alcohol and drug addiction.
Novo Nordisk’s Wegovy and Eli Lilly‘s Mounjaro work by imitating a naturally occurring gut hormone that helps regulate appetite in the brain, ultimately leading to weight loss. For that, they rely on active ingredients called semaglutide and liraglutide, respectively, which belong to a group of drugs called GLP-1 receptor agonists.
Pre-clinical trial data has for several years pointed to the efficacy of GLP-1 medication in reducing drug and alcohol intake among animals. Hendershot is now testing Ozempic — Wegovy’s predecessor used to treat type 2 diabetes — to see whether those trends apply to humans, too.
If those two studies both readout … it’s hard to overstate the effect this will have on the field.
Kyle Simmons
rofessor of pharmacology and physiology at Oklahoma State University
“There is reason for optimism, particularly given the reports. Now it’s our job to do the research to validate those findings with clinical data,” said Hendershot, who expects to publish early findings next year.
If broader applications of the drugs are proven to be effective, the implications could be vast, according to Kyle Simmons, professor of pharmacology and physiology at Oklahoma State University, who cited early indications of the drugs’ efficacy in reducing cocaine, amphetamine and opioid cravings.
Simmons is currently leading the Semaglutide Therapy for Alcohol Reduction (STAR) trial, a 12-week double-blind, placebo-controlled study, which is running in tandem with a separate but similar study at the University of Baltimore.
“If those two studies both read out, and they’re both positive, it’s hard to overstate the effect this will have on the field,” he said.
Some researchers are hopeful the drugs could also have use cases in the treatment of dementia and other cognitive disorders.
Already, there is evidence to suggest that GLP-1 drugs can reduce the build-up of amyloid and tau on the brain — two proteins thought to be responsible for Alzheimer’s disease, the most common type of dementia.
Now, a trial underway at the University of Oxford will test patients at risk of developing dementia — i.e. those with high levels of amyloid on the brain — to see whether the drugs lead to a reduction in tau accumulation and brain inflammation.
“We want to see if these drugs are interfering with the core Alzheimer’s disease pathology,” said Ivan Koychev, a senior clinical researcher, who is leading the study.
Elsewhere, others think the drugs could have potential applications in the treatment of polycystic ovary syndrome (PCOS), a disorder that can cause irregular periods, hormone imbalances and fertility issues.
“If women with PCOS exhibit positive outcomes in terms of irregular periods and hirsutism [excess hair growth] despite modest weight loss, it could underscore the medication’s broader therapeutic potential,” said Harshal Deshmukh, a consultant endocrinologist and senior clinical lecturer at the University of Hull, who is currently conducting one such trial.
Additional possible use cases for weight loss drugs could exacerbate the hurdles already faced by patients using them, however: high costs and supply shortages.
Earlier this month, Novo Nordisk extended restrictions on starter doses of Wegovy due to production constraints, while Eli Lilly warned of continued delays in Mounjaro output for the same reason.
Hendershot said his study was not currently being impacted by shortages, but Simmons described it as a “significant concern.”
Meantime, concerns have been raised about the possible adverse effects of the drugs after some patients reported thoughts of suicide or self-harm.
Is this medication … turning down the gain on reward-signaling
Kyle Simmons
rofessor of pharmacology and physiology at Oklahoma State University
Novo Nordisk CEO Lars Fruergaard Jorgensen told a Reuters Newsmaker event last month that the number of suspected cases remained minimal relative to the wide reach of the drug. “When you have medicine that’s used in millions of patients, and many different types of patients, then you can come across different events,” he said.
However, Simmons said that more research is still needed to understand the impact of such drugs on reward signaling in the brain. His own research will test for such signals by monitoring participants’ reward responses in a virtual reality simulation.
“Is this medication, because of its effects maybe on the mesolimbic dopamine system, just turning down the gain on reward signaling in such a way that could promote anhedonia?” Simmons said. Anhedonia is a term used to describe a reduced ability to experience pleasure.
“If this drug is used by more and more people, if it starts to promote a loss of interest in pleasure more generally, that might not be a great thing, for example, for people who have a history of major depressive disorder,” he added.
Market Movers rounded up the best reactions from investors and analysts on Eli Lilly . The experts, including Jim Cramer , discussed the drugmaker after it reported second-quarter revenue and earnings Tuesday that beat Wall Street estimates. The company also raised its full-year guidance as quarterly profit soared 85% from the same period last year. Shares of Eli Lilly hit an all-time high during intraday trading, perhaps also getting a boost from a Novo Nordisk trial. The study found Novo Nordisk’s obesity drug Wegovy, which shares some similarities with Lilly’s Mounjaro, cut the risk of heart disease in participants by 20%. Eli Lilly’s stock finished the day about 14.9% higher. LLY is currently held in Cramer’s Charitable Trust portfolio.
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Tuesday’s key moments. Stocks sink Eli Lilly surges Palo Alto slumps 1. Stocks sink U.S. stocks tumbled Tuesday after Moody’s downgraded the credit rating on a slew of small and mid-sized banks, sending shares of financials into a tailspin. Economic data released overnight showed a slump in Chinese imports and exports in July, adding to U.S. market worries. The Dow plunged more than 300 points or roughly 1%. The S & P 500 also lost about 1%. The tech-heavy Nasdaq was hit harder, down about 1.3%. Still, the Moody’s cut shouldn’t directly impact our portfolio as the Club invests in larger banks, Wells Fargo (WFC) and Morgan Stanley (MS), instead of the much smaller firms targeted. With additional cash on hand, the intensified Wall Street selloff gave us another reason to buy , picking up some more Coterra Energy (CTRA) shares. 2. Eli Lilly surges Club name Eli Lilly (LLY) skyrocketed more than 16% on hopes for Mounjaro’s use to prevent major cardiovascular events. Already approved for Type-2 diabetes and under review for obesity, Mounjaro could prove to act in a similar way to Novo Nordisk ‘s Wegovy and Ozempic. New data showed those weight loss and diabetes drugs cut the risk of heart attack or stroke by 20%. As for strong earnings, which also helped the stock, Eli Lilly had a great quarter and raised full-year guidance. 3. Palo Alto slumps Palo Alto Networks (PANW) fell another 2.5% amid an ongoing slump for the leading cybersecurity stock. JPMorgan put PANW on a negative catalyst watch. The analysts anticipate that any negative data could place further downside pressure on the Club holding. Still, the analysts maintain their overweight (buy) rating, adding they would be buyers on further weakness, which they see as temporary. We feel the same way as JPMorgan, upgrading our Club rating to a 1 on Monday. Since Friday’s 8% loss on a competitor’s misfortunate, PANW shares have been down Monday and now Tuesday as well. (Jim Cramer’s Charitable Trust is long WFC, MS, LLY, PANW. 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. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Tuesday’s key moments. Watch Morgan Stanley Hold Eli Lilly Buy Ford 1. Watch Morgan Stanley Bank stocks climbed higher Tuesday, as Club holding Morgan Stanley (MS) delivered an earnings beat. Equities more broadly were mixed in late morning trading, with the S & P 500 up 0.34% and the Nasdaq Composite down 0.15%. “My conviction is that Morgan Stanley stock goes higher,” Jim Cramer said Tuesday. But “my discipline says you already have too much of it,” he added, suggesting we would consider trimming into strength. Shares of Morgan Stanley soared more than 6% Tuesday morning, to nearly $92 apiece. 2. Stick with Eli Lilly Shares of Eli Lilly (LLY) are up more than 1% Tuesday, at around $452 each, after CEO David Ricks provided an update on the company’s positive results from its latest Alzheimer’s study Monday. Data from the late-stage trial showed Alzheimer’s drug donanamab significantly slowed cognitive decline. We remain bullish on the pharmaceuticals giant for a strong pipeline that includes Mounjaro, a diabetes medication awaiting approval in the U.S. to treat obesity. Jim has repeatedly said it could be the best-selling drug of all time. 3. Buy Ford Our automaker, Ford (F), cut prices on its popular electric pick-up truck Monday. The price reduction on its high-demand EV stoked some market fears, with the stock falling about 6% on the news. We aren’t concerned about the price cuts and are aware of the possibility that there could be more price changes in the future. But the company has been able to increase scale and reduce battery costs, which should help profitability. “I would not sell Ford, I would be a buyer,” Jim said Tuesday. (Jim Cramer’s Charitable Trust is long MS, LLY, F. 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. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The groups asked the court to declare the program unconstitutional and prevent the Department of Health and Human Services from implementing Medicare negotiations without “adequate procedural protections” for drug manufacturers.
HHS did not immediately respond to CNBC’s request for comment.
It marks the fourth lawsuit challenging the controversial provision of the Inflation Reduction Act, which became law last summer in a major victory for President Joe Biden and Democratic lawmakers.
The policy aims to make drugs more affordable for older Americans but will likely reduce pharmaceutical industry profits. Merck and Bristol Myers Squibb — who are also represented by PhRMA — and the U.S. Chamber of Commerce filed separate lawsuits against the provision earlier this month.
The latest lawsuit argues the plan delegates too much authority to the HHS.
PhRMA and the two organizations also argue that the provision includes a “crippling” excise tax aimed at forcing drugmakers to accept the government-dictated price of medicines, making it an excessive fine prohibited by the Eighth Amendment.
The lawsuit also argues the policy violates due process by denying pharmaceutical companies and the public input on how Medicare negotiations will be implemented.
“The price setting scheme in the Inflation Reduction Act is bad policy that threatens continued research and development and patients’ access to medicines,” PhRMA CEO Stephen Ubl said in a statement.
“It also violates the U.S. Constitution because it includes barriers to transparency and accountability, hands the executive branch unfettered discretion to set the price of medicines in Medicare and relies on an absurd enforcement mechanism to force compliance,” Ubl said.
The first 10 drugs the provision applies to will be chosen in September, with the agreed prices taking effect in 2026.
You can’t deny the buzz. Credit Suisse analyst Trung Huynh has combed through social media and is impressed by the awareness — and demand — for GLP-1 medications such as Eli Lilly ‘s Mounjaro. “Although we caution posts may have responder bias, and comments are in the public domain and unconfirmed, nonetheless we have parsed through and curated an archive of the most interesting observations that provide an alternative perspective to traditional data, in our view,” Huynh said in a research note Thursday. Among those observations are reports of other potential benefits that patients taking Mounjaro, or tirzepatide, are seeing. To recap, Mounjaro has been approved as a treatment for type 2 diabetes, but the drug is expected to be cleared by the Food and Drug Administration, possibly by the end of this year, to treat obesity and overweight. Patients enrolled in Lilly’s studies have lost as much as 20% or more of their initial weight when taking the drug, topping results from other available medications. The company is also conducting several additional trials to explore the use of tirzepatide to treat other conditions like sleep apnea. Huynh reported seeing social media posts where people with sleep apnea said they were able to get better sleep quality or discontinue the use of a CPAP machine after losing weight on Mounjaro. Others taking the drug reported benefits such as a reduction in addiction behaviors such as smoking, drinking, gambling and shopping, among other things. “Although relatively unsurprising given the literature suggests GLP agonism suppresses hedonic food intake through the brain reward pathway, we are very interested in the potentially far-reaching effect beyond obesity and T2D,” Huynh said. He noted that other comments suggested uses for the drug to treat infertility and polycystic ovary syndrome, a condition that has a 50% to 60% overlap with obesity. Although Lilly hasn’t said it’s exploring this indication, Novo Nordisk — which has a rival GLP-1 medication, semaglutide — has registered a new study to evaluate this. The biggest point of caution is that social media chatter suggests that health insurance providers are becoming more restrictive with reimbursement. However, this may be a function of patients who are trying to use Mounjaro off-label for obesity, he said. GLP-1 medications carry hefty price tags. To assist with payments, Lilly is offering a $575 copay coupon that expires at the end of the year, Huynh said. Credit Suisse has an outperform rating on Lilly shares, with a $490 price target, which implies more than 9% upside from where Lilly shares closed Wednesday. LLY YTD mountain LLY in 2023 — CNBC’s Michael Bloom contributed reporting.
An Eli Lilly and Company pharmaceutical manufacturing plant is pictured at 50 ImClone Drive in Branchburg, New Jersey, March 5, 2021.
Mike Segar | Reuters
The Alzheimer’s treatment donanemab, which is made by Eli Lilly, significantly slowed progression of the mind-robbing disease, according to clinical trial data released Wednesday by the company.
Patients who received the monthly antibody infusion during an 18-month study demonstrated a 35% slower decline in memory, thinking and their ability to perform daily activities compared with those who did not receive the treatment, Eli Lilly’s data showed.
Patients who took donanemab were 39% less likely to progress to the next stage of the disease during the study, according to the trial results.
But the treatment’s benefits will have to be weighed against the risk of brain swelling and bleeding that can be serious and even fatal in rare cases. Three participants in the trial died from these side effects.
Eli Lilly’s stock was up more than 6% in premarket trading Wednesday.
Lilly plans to apply for Food and Drug Administration approval of donanemab as soon as this quarter, according to the company. The trial studied individuals in the early stages of Alzheimer’s who had a confirmed presence of brain plaque associated with the disease.
Dr. Daniel Skovronsky, Lilly’s chief scientific and medical officer, said donanemab demonstrated the highest level of efficacy of any Alzheimer’s treatment in a clinical trial. The company is working to get donanemab approved and on the market as quickly as possible, he said.
And Skovronsky believes the FDA feels the same sense of urgency.
“Every day that goes by, there are some patients who pass through this early stage of Alzheimer’s disease and become more advanced and they won’t benefit from treatment,” he said in an interview with CNBC. “That’s a very pressing sense of urgency.”
Lilly previously applied for expedited approval of donanemab.
The FDA rejected that request in January and asked the company for more data on patients who received the antibody for at least 12 months. Lilly said the data wasn’t available at the time because many patients were able to stop dosing at six months because the treatment cleared plaque quickly.
Nearly half of patients — 47% — who received donanemab showed no disease progression a year after treatment began, compared with 29% who did not receive the antibody, according to the data released Wednesday.
More than half of patients completed the treatment in the first year and 72% completed it in 18 months due to clearance of brain plaque.
In a separate measure, patients who received donanemab showed 40% less decline in their ability to conduct daily activities at 18 months. This means they could better manage finances, drive, pursue hobbies and hold conversations than those who did not receive the treatment.
“These are the strongest phase 3 data for an Alzheimer’s treatment to date. This further underscores the inflection point we are at for the Alzheimer’s field,” said Maria Carrillo, the Alzheimer’s Association chief scientific officer, in a statement.
Donanemab targets brain plaque associated with Alzheimer’s disease. The treatment significantly reduced the plaque as early as six months after treatment, according to Lilly. Many patients saw such significant reductions that they tested negative for plaque presence on their PET scans, according to the company.
Donanemab cleared the plaque at six months in 34% of patients who had intermediate levels of a protein called tau that can become toxic and kill neurons. At 12 months, donanemab cleared the plaque in 71% of patients with the same tau levels.
“It should be unequivocal that drugs that remove plaque, particularly if you can remove plaque completely and do it quickly, can lead to very significant clinical benefits for patients,” Skovronsky said in an interview.
“The earlier in the disease course you do this, the more you can slow the disease,” he said.
Dr. Eric Reiman, executive director of the Banner Alzheimer’s Institute, said the results do not necessarily mean the plaque is completely gone, but donanemab cleared the plaque to such a degree that the treatment removed measurable evidence of it. The Banner Alzheimer’s Institute had two physicians who participated in the donanemab trial as principal investigators.
Donanemab can cause brain swelling and bleeding in patients that in some cases can be severe and even fatal. Three trial participants died from these side effects, according to Lilly.
These types of side effects have been observed in other Alzheimer antibody treatments such as Eisai and Biogen’s Leqembi, which received expedited FDA approval in January.
Reiman said he’s encouraged by the potential clinical benefit to patients but it’s important to be clear about the risks.
“We also need to be clear that there are side effects, including an uncommon but potentially catastrophic risk,” said Reiman. “And we need to continue to do our best to understand what that risk is for individual patients, to inform patients and family caregivers, and do everything we can to mitigate that risk,” he said.
About 24% of patients who received donanemab showed brain swelling on an MRI, but only 6% displayed actual symptoms. About 31% of patients had small brain bleeds called microhemorrhages, compared with 13.6% among patients who didn’t receive the treatment.
Lilly said the majority of the cases of brain swelling and bleeding were mild to moderate and patients stabilized with the right care, but cautioned that serious and life-threatening events can occur. About 1.6% of the swelling and bleeding cases were serious, according to Lilly.
Skovronsky said every patient would need to have a discussion with their doctor that weighs the potential benefits of donanemab with the possible risks.
“On a population basis, our view is its benefits outweigh risks,” Skovronsky said.
“FDA is the steward of that for the U.S.,” he said of the risk-benefit analysis that will determine whether donanemab wins approval.
Seniors with early Alzheimer’s disease will face major hurdles to get treated even if promising new drugs roll out more broadly in the coming years, putting them at risk of developing more severe disease as they wait months or perhaps years for a diagnosis.
The U.S. health-care system is not currently prepared to meet the needs of an aging population in which a growing number of people will need to undergo evaluation forAlzheimer’s, according to neurologists, health policy experts and the companies developing the drugs.
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There are not enough dementia specialists or the needed testing capacity in the U.S. to diagnose everyone who may benefit from a new treatment like Eisai and Biogen‘s Leqembi. After patients are diagnosed, the capacity may not exist — at least initially — to provide the twice monthly intravenous infusions for everyone who is eligible.
Researchers estimate that the wait time from the initial evaluation to the confirmatory diagnostic tests to the infusions could range anywhere from a year and a half to four years or longer. Those months are critical for people with Alzheimer’s.
“The whole process from that time of the family physician conversation to the point of infusion, I worry how long it will take and the complexities of the patient navigating through all of that to successfully get to the end,” Anne White, president of neuroscience at Eli Lilly, which is developing its own Alzheimer’s treatment, told CNBC.
There are promising innovations in development, such as blood tests and injections that patients would take at home, which could make it significantly easier to get diagnosed and treated in the future.
White also said Lilly is confident that more doctors will get into the field and help to alleviate capacity issues, as awareness grows that medicines are entering the market to treat Alzheimer’s.
But time spent waiting robs early patients of their memory and ability to live independently. Alzheimer’s gets worse with time, and as patients deteriorate into more advanced stages of the disease, they no longer benefit from treatments like Leqembi that are designed to slow cognitive decline early.
More than 2,000 seniors transition from mild to moderate dementia from the disease a day, according to estimates from the Alzheimer’s Association. At that stage, they become ineligible for Leqembi.
The central challenge is that a large and rapidly growing group of people have early memory loss and other thinking problems known as mild cognitive impairment. This condition is often, though not always, a sign of early Alzheimer’s disease.
An estimated 13 million people in the U.S. had mild cognitive impairment last year, according to a study published in the Alzheimer’s and Dementia Journal. As the U.S. population ages, the number of people with this condition is expected to reach 21 million by 2060, the study projected.
The U.S. health-care system will deal with major logistical challenges in diagnosing the growing population of people with early Alzheimer’s — even before patients face potential issues with accessing treatment.
“There’s a very large population of undiagnosed cognitive impairments that need to be evaluated in order to determine if people are eligible for treatment,” said Jodi Liu, an expert on health policy at the Rand Corporation.
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Access to drugs like Leqembi is severely restricted because Medicare for nowwill only cover the $26,500-per-year treatment for people participating in clinical trials. Medicare has promised to provide broader coverage if Leqembi receives full approval from the Food and Drug Administration, which Eisai expects to happen in July.
Eisai has estimated that 100,000 people in the U.S. will be diagnosed and eligible for Leqembi by the third year of the treatment’s rollout. The sum is a fraction of the total population that could benefit.
Those patients could have other options if new treatments emerge from trials with positive marks.
Eli Lilly will publish clinical trial data on its antibody infusion donanemab in the second quarter of this year. If the data is positive, the company will ask the FDA to approve the drug.
Eisai’s U.S. CEO Ivan Cheung and Lilly’s White said during the companies’ respective earnings calls in February that they are focused on working with the U.S. health system to address the challenges of rolling out of Alzheimer’s treatments.
“The primary goal right now during this launch phase […] is really get the market ready in terms of the diagnostic pathway, the infusion capacity, the education on how to monitor for this therapy, get all the hospitals and clinics ready,” Cheung said.
Long lines are expected at the offices of geriatricians, neurologists and radiologists as millions of people with mild cognitive impairment undergo evaluation to diagnose whether they have Alzheimer’s disease.
Demand for geriatricians — doctors who are experts in diseases that affect the elderly — is expected to outstrip the number of specialists available in the field through at least 2035, according to projections from the federal Health Resources and Services Administration.
The American Academy of Neurology told Medicare in a February letter that increased demand for Alzheimer’s treatments will put substantial pressure on neurologists, who will need additional resources. The federal data predicts a substantial shortage of these specialists in rural areas through at least 2035.
“You just look at the neurologists, look at geriatricians — there are fewer and fewer geriatricians per person in the U.S.,” Rand’s Liu said. “It’s just a few number of specialists to do this kind of work.”
White said Lilly has heard stories of patients waiting six to 12 months to see a neurologist or other doctors who treat dementia due to current capacity issues.
The number of radiologists — who also play a role in diagnosing the disease — is expected to decline in the U.S. through 2035 even as demand increases, the data shows.
In a study published in 2017, Liu and other Rand researchers estimated an initial wait of 18 months for patients to get evaluated by a dementia specialist, tested to confirm a diagnosis, and then treated in the first year that an Alzheimer’s antibody treatment becomes available. The wait would decrease to 1.3 months by 2030 as the patient backlog is cleared, they estimated at the time.
But more recent research found that the wait would actually increase as demand created by an aging U.S. population outstrips the supply of specialists.
Patients seeking a first specialist visit could face an initial wait of 20 months, according to a study by researchers at the University of Southern California published in the journal Alzheimer’s and Dementia in 2021. The delay could increase to about four years as early as 2028 and grow longer through 2050, the study found.
The journal is published by the Alzheimer’s Association.
Both studies are based on assumptions made before Leqembi received expedited approval from the FDA in January. Actual wait times could differ from the studies’ projections.
Two types of tests can diagnosis Alzheimer’s disease: PET scans and spinal taps. PET scans are accurate and safe diagnostic tools, but they are also cumbersome and expensive, said Dr. David Russell, a neurologist.
Patients are injected with a tracer that makes brain abnormalities visible to the machine that does the imaging. Tracers have to be made for each patient and used on the same day.
“We don’t have the infrastructure to roll out PET scanning on a major scale,” said Russell, director of clinical research at the Institute for Neurodegenerative Disorders in New Haven, Connecticut. He is the principal investigator on the clinical trials of Leqembi and donanemab at the institute.
Medicare coverage of PET scans for Alzheimer’s patients is also limited right now. The insurance program for seniors will only cover one scan per lifetime, and only when the patient is participating in a clinical trail approved by the federal Centers for for Medicare and Medicaid Services.
“That’s concerning because people may actually test negative at one point but then obviously as they age, they may need to get tested again,” White said.
Early Alzheimer’s disease can also be diagnosed with a spinal tap, in which fluid around the spinal cord is extracted with a catheter and tested. While there’s plenty of capacity to do spinal taps, this option isn’t attractive to many patients due to unfounded fears that it’s painful and dangerous, Russell said.
Though “there’s a lot of resistance” to the procedure, it is well tolerated and safe, he noted.
“There are certainly areas that don’t have a PET scanner, rural areas, so people would need to travel to a health center that has a PET scanner,” Liu said.
In a large, sparsely populated rural state like New Mexico, many patients would have to drive three to five hours to get a PET scan in a city such as Albuquerque, said Dr. Gary Rosenberg, a neurologist and director of the New Mexico Alzheimer’s Disease Research Center.
“It’s not California or the East Coast where everything’s very compressed and people can travel and get to a center pretty easily and go through these kinds of treatments,” Rosenberg said.
The state has an estimated population of 43,000 people with dementia, and there are very few neurologists outside of the Albuquerque area, Rosenberg said. The New Mexico Alzheimer’s Disease Research Center in Albuquerque is one of only three such facilities funded by the federal National Institute of Aging in a vast region stretching west from Texas to Arizona.
To do a PET scan, a tracer has to be made for each patient off-site in Phoenix, flown on a private plane to Albuquerque and used within hours because the tracers have a short shelf life, according to Rosenberg. The whole process costs more than $12,000 per patient, he added.
“It’s logistically going to be very challenging,” Rosenberg said.
After spending months or possibly years waiting to get diagnosed with early Alzheimer’s, patients would then be eligible for intravenous infusions of Leqembi. But the U.S. doesn’t currently have the capacity to give infusions twice monthly for everyone who likely has the disease, Russell said.
“Having an IV infusion every two weeks would sort of ration people to availability and that’s a problem,” Russell said.
The University of New Mexico Hospital is already maxed out with demand for infusion therapies for cancer, rheumatoid arthritis and autoimmune diseases, and could have a “problem” adding new capacity, said Rosenberg.
Intravenous infusions of monoclonal antibodies like Leqembi aren’t difficult to administer, Russell said.
The infrastructure to offer infusions should expand rapidly once industry sees there’s demand for treatments like Leqembi. But the process of building out capacity could still take a couple years, Russell said. He believes big players like CVS will provide infusions for Alzheimer’s disease on a major scale if they see there’s a large and stable market.
“In one sense, capitalism works, and if it looks like that’s going to be the future, I think infusion centers will explode onto the scene,” the neurologist said.
Eisai and Biogen hope to move early Alzheimer’s patients to a single monthly dose of Leqembi after they’ve completed their initial course of twice monthly infusions, which could help alleviate some of the capacity issues with infusions over time. They plan to ask the FDA to approve this plan in early 2024.
Eli Lilly’s Alzheimer’s candidate antibody treatment donanemab is a single monthly dose, potentially making the logistics of administration easier if the drug gets approved. Dr. Dan Skovronsky, Lilly’s chief medical officer, told analysts during the company’s first-quarter earnings call that he expects many patients will be able to stop taking donanemab at 12 months.
Though the projected wait times to get diagnosed and treated are sobering, innovations on the horizon promise to significantly improve access to Alzheimer’s drugs over time.
Blood tests for Alzheimer’s are in development and some are already on the market. Primary-care doctors could administer the tests, which would ease the burden on patients, especially those in rural communities where the closest PET scan machine is hours away.
These tests detect proteins in the blood associated with Alzheimer’s. They promise to help diagnose the disease before people display cognitive symptoms, potentially giving patients the chance to get treated before they suffer irreparable brain damage, according to the National Institutes of Health.
At least three blood tests made by C2N Diagnostics, Quest Diagnostics and Qaunterix are currently on the market. But they are used to evaluate people who are already presenting symptoms and aren’t available on the mass scale needed for the expected increase in Alzheimer’s patients.
C2N’s PrecivityAD test costs $1,250 and is not covered by insurance — though the company has a financial assistance program. Quest Diagnostics’ AD-Detect test costs $650. Quest’s test is covered by some insurance plans but not Medicare at the moment. The company also has a financial assistance program. Quanterix wouldn’t disclose the price of its test, which insurance does not cover.
Right now, these are not stand-alone tests that can definitively diagnose Alzheimer’s. But the tests could help identify the patients who likely have the disease, which would narrow the population that needs further evaluation and reduce wait times for dementia specialists or confirmatory PET scans.
A study in the journal Alzheimer’s and Dementia estimated that a cognitive test combined with a blood test could slash wait times for dementia specialists from 50 months down to 12 months.
Eisai believes that inexpensive blood tests could completely replace PET scans and spinal taps by the fourth year of Leqembi’s rollout. The quicker diagnosiscould increase the number of people eligible for treatment.
Rosenberg said widespread availability of blood tests will allow mobile clinics to go into rural communities and identify who has markers associated with Alzheimer’s. This would allow patients in remote towns avoid the hours-long drive to cities with PET scan machines, Rosenberg said.
“It’s a game changer,” the neurologist said.
Lilly is developing at least two blood tests. The company is already using one test in clinical trials and hopes to commercialize it sometime this year. It is developing a second test through a collaboration with Roche. White said it is reasonable to expect that in a few years blood tests could replace more burdensome PET scans.
Biogen and Eisai are also developing an injectable form of Leqembi which patients could administer themselves with an autoinjector similar to insulin pens, saving the trip to a site that provides intravenous infusions. They plan to ask the FDA to approve these so-called subcutaneous injections in early 2024.
Eli Lilly is also conducting clinical trials on an antibody treatment called remternetug as a self-administered injection. But the promise of injections that can be administered at home could make companies reluctant to invest in building out intravenous infusion capacity, Russell said.
In the future, Alzheimer’s diagnosis and treatment could be folded into routine checkups with a family doctor, Russell said. When people turn 50 and head in to get a colonoscopy or a cholesterol check, the doctor could also run a blood test for Alzheimer’s.
If the test comes back positive, the doctor could then schedule patients for an MRI and get them started on an autoinjector treatment, Russell said.
“That’s going to be the way that we’re looking at it in the not too distant future,” he said.
U.S. Treasury yields were little changed on Tuesday, as investors continued to assess the outlook for the U.S. economy and digested the latest round of corporate earnings.
As of around 2:20 a.m. ET, the yield on the benchmark 10-year Treasury note was fractionally higher at 3.5946% while the yield on the 30-year Treasury bond also nudged marginally upwards to 3.8080%. Yields move inversely to prices.
Corporate earnings season dominates this week’s agenda, with giants Johnson & Johnson, Bank of America and Goldman Sachs all set to report before the opening bell on Wall Street on Tuesday.
On the data front, traders will have an eye on the March housing starts and building permits figures due at 8:30 a.m. ET. Housing starts for the month are expected to have fallen by 3.4% to 1.40 million units, according to Dow Jones consensus estimates, while building permits are projected to drop by 4.9% to 1.45 million units.
Markets are closely following economic data for a read on where the Federal Reserve might take interest rates at its next meeting in early May. More than 84% of traders are calling a 25 basis point hike at the next policy meeting, according to CME Group’s FedWatch tool.
An auction will be held Tuesday for $34 billion of 52-week Treasury bills.