(Bloomberg) -- Eli Lilly & Co. is using its runaway success in obesity as a bridge into another lucrative area of medicine: immunology.
This fall, the company will begin recruiting for trials to test its popular weight-loss shot Zepbound with psoriasis drug Taltz to see if the combination boosts effectiveness, Chief Scientific Officer Daniel Skovronsky said. The Indianapolis-based drugmaker is also exploring combination studies with Zepbound in inflammatory bowel disease, another immune disorder.
Every top-selling success in the pharma industry is clouded with chronic anxiety over how to follow it up — sooner or later, competition is going to cut into sales. The combination studies are part of Lilly’s efforts to become a top player in immunology while creating a phalanx of drugs to outlive its obesity and diabetes breakthroughs.
“The challenge at Lilly has not been a lack of great moments, it’s been the continuity between them and avoiding these kinds of valleys in innovation that happen,” Skovronsky said in an exclusive interview at the company’s headquarters in Indianapolis. “Immunology is one of the answers to what’s next.”
Drugs like Zepbound, known as GLP-1 receptor agonists, have been shown to reduce inflammation in patients with diabetes and obesity. Observational studies and case reports have even linked the drugs to improvements in autoimmune conditions like psoriasis, but there haven’t been any large clinical trials to validate that theory until now.
Lilly remains committed to obesity, a market expected to reach $130 billion by the end of the decade. But Zepbound’s ability to address other health conditions is part of its allure. On Tuesday, the company’s shares soared to a record high after Lilly said Zepbound cut obese patients’ risk of developing type 2 diabetes by 94% in a three-year study.
The company’s shares rose as much as 4.9% to $967 as of 12:17 p.m. in New York.
Lilly’s running other large trials in related health conditions like sleep apnea and heart failure, and is doing similar studies with its next-generation drugs. Being at the forefront of metabolic science boosts drug development in other diseases, Skovronsky said. He wants Lilly to be “an organization that can take all the progress we’re making in one area and then be nimble to invest in others.”
Following a reshuffle of Lilly’s executive leadership last year, Skovronsky took on the additional role of overseeing the immunology business, a field where demand is large and still expanding. Sales of drugs for inflammatory conditions could top $117 billion in 2028, with a compounded annual growth rate of 5% in that time, according to Bloomberg Intelligence estimates.
Lilly already sells several treatments for inflammatory conditions like arthritis and psoriasis, including Taltz, which will lose key patent protections in the next few years. The company is also awaiting US regulatory approval for an eczema treatment after it was delayed last year, and recently won clearance for Omvoh, a treatment for ulcerative colitis.
Now the company has an eye for promising compounds that could be combined with its current drugs for greater effectiveness. Last week, Lilly closed the $3.2 billion purchase of Waltham, Massachusetts-based Morphic Therapeutic, gaining access to an experimental pill for inflammatory bowel disease that Skovronsky thinks could work well in combination with Omvoh. The company also shelled out $2.4 billion last year to buy Dice Therapeutics, a developer of oral psoriasis therapies.
Drug combinations may be the next frontier in autoimmune diseases, where there’s still unmet need for more effective treatments. AbbVie Inc. has expressed interest in combining its anti-inflammatory drug Skyrizi with another compound to drive efficacy even higher.
Skovronsky sees Lilly doing “a number of deals” like these going forward. “I think we’d rather go earlier and pay less,” he said. “And if it sometimes doesn’t work our way, then we’ll do another deal.”
The potential rewards are tantalizing. Humira, AbbVie Inc.’s treatment for rheumatoid arthritis and psoriasis, was until recently the world’s best-selling drug; Dupixent, another blockbuster marketed by Sanofi Plc and Regeneron Pharmaceuticals Inc., is prescribed for ailments ranging from asthma to eczema. Looking to replenish its pipeline as blockbuster cancer drug Keytruda ages, Merck & Co. bought immune drug maker Prometheus Biosciences Inc. last year for $11 billion.
With a value already approaching $900 billion, Lilly still holds high investor hopes and wants to maintain the momentum. That means avoiding pitfalls that have long plagued companies fortunate enough to have a wildly profitable drug. In the 90s, for example, the loss of patent protections on Lilly’s depression blockbuster Prozac sent the company into a tailspin as it struggled for a decade to find its footing.
“The mistake we made was, we said Lilly is a company that is going to be a leader in psychiatry forever, let’s just focus on R&D there,” Skovronsky said. “I don’t want us to be where we were 20 years ago in psychiatry.”
(Updates shares in sixth, seventh paragraphs.)
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