Why a Pair of Eli Lilly Clinical Trials Sent ResMed Stock Tumbling

By
Aaron McDade
Aaron McDade Headshot
Full Bio
Aaron McDade is a breaking news reporter for Investopedia. He is an experienced journalist who has covered everything from the latest in business and tech news to sports and international news like the war in Ukraine for respected outlets like Business Insider and Newsweek.
Learn about our editorial policies
Published June 24, 2024
An Eli Lilly & Co. Zepbound injection pen arranged in the Brooklyn borough of New York, on March 28, 2024

Shelby Knowles / Bloomberg via Getty Images

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.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

  1. Eli Lilly and Company. "Lilly's tirzepatide reduced obstructive sleep apnea (OSA) severity, with up to 51.5% of participants meeting the criteria for disease resolution."

  2. ResMed. "ResMed Inc. Announces Results for the Third Quarter of Fiscal Year 2024."

  3. ResMed. "Q3 FY2024 Earnings."

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.