What signal Lilly sends by stockpiling GLP-1 obesity pills ahead of FDA approval
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch, an actionable afternoon update just in time for the final hour of trading on Wall Street. Stocks are rallying to cap another volatile week that saw the S&P 500 still heading for losses over the last five trading days. The cooler-than-expected January consumer price index played a role in the market’s positive trend on Friday, lowering bond yields and increasing interest rate cut expectations for the end of this year. This week’s data, along with a stronger-than-expected January employment report, will have the market feeling a little better about the direction of the economy. There are also some bounces in the sectors most affected by fears of AI disruption, particularly software, which was the first group to sell off due to these concerns earlier this year. All S&P sectors were in positive territory except communications services, which was weighed down by declines in Alphabet. The three best performing sectors in the market during the week are; utilities, materials and real estate. This was the market’s way of saying that the risk of AI disruption to these tangible asset holders was minimal. Both consumer staples and energy also posted gains of more than 1%. The weakness seen in the market this week is most concentrated in finance, communications services, consumer preferences and technology. Eli Lilly is preparing for the launch of its GLP-1 obesity pill. A filing Thursday showed that the drugmaker had built up $1.5 billion worth of inventory before orforgliprone was launched. That’s more than the roughly $550 million in inventory Lilly said it had last year. The Food and Drug Administration has set April 10 as the target action date to approve orforgliprone, and this pre-established inventory suggests that Lilly expects strong demand out of the gate and will not face the supply chain shortages that the GLP-1 market is experiencing from 2022 to 2024. If the strong uptake of Novo Nordisk’s weight loss Wegovy pill is a guide, these new drugs will expand the category with new beginnings and not particularly cannibalize the market. Nearly 50 companies in the injectable market S&P 500 are scheduled to report earnings during the upcoming holiday-shortened week. In the portfolio, we will have Palo Alto Networks on Tuesday night and Texas Roadhouse on Thursday night. A few other notable earnings reports to watch include Walmart, DoorDash, Toll Brothers, and Deere. On the data side, at the beginning of the week, durable goods orders, housing starts, industrial production, December PCE price index, fourth quarter GDP, new home sales and University of Michigan consumer confidence and inflation expectations come. (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) When you subscribe 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 trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.
