Sleep Apnea Device Manufacturer Stocks Fall on FDA’s Zepbound Ruling

The Key Take-Aways

• Shares of ResMed and Inspire Medical Systems fell after the FDA approved Eli Lilly's weight-loss drug Zepbound to treat moderate-to-severe obstructive sleep apnea in adults with obesity.
• The regulators’ decision has raised concerns that manufacturers of current products for treating breathing disorders will lose market share to prescription medications.
• ResMed's Chief Medical Officer has suggested doctors will prescribe using both drugs and devices such as his company makes together to help sleep apnea suffers.

ResMed and Inspire Medical Systems shares fell on Monday, as companies that make products for sleep apnea were facing a new challenge from drugs to help people lose weight.

Eli Lilly announced on Friday (July 6) that FDA had approved Zepbound for the treatment of moderate to severe sleep apnea among adults who are obese.

Lilly stated that FDA’s decision was made after Phase 3 clinical studies that demonstrated Zepbound to be five times as effective as a placebo at reducing respiratory disturbances in patients who were not using a Positive Airway Pressure (PAP), i.e., if they are sleeping with CPAP devices.

ResMed Chief Medical Officer Carlos Nunez said that positive results from weight-loss medicines give doctors more options in treating sleep apnea, and those drugs will likely be used "concomitantly with positive airway pressure (PAP) therapy," such as products offered by his company.

Even with today's roughly 4% slide, shares of ResMed have added about a third of their value this year. Inspire Medical Systems’ shares have fallen by 1.4% since the last trading session, and will lose 9% of their value in 2024. Among analysts followed by Visible Alpha, three rate ResMed a "buy" and four a "hold," and seven call Inspire Medical Systems a "buy" and two a "hold."

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