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

Core Insights - ResMed shares experienced a significant decline following the release of Eli Lilly's clinical trial data indicating that its weight-loss drug Zepbound effectively reduces sleep apnea severity without the need for traditional masks [1][2] - The market reaction suggests potential challenges for ResMed's business model, which heavily relies on sales of sleep apnea devices [2][3] Company Overview - ResMed specializes in treating sleep apnea and generated approximately $1.2 billion in revenue from device sales in its most recent quarter [3] - The company has noted a positive correlation between the use of GLP-1 weight-loss drugs and the demand for sleep apnea treatments, indicating a sizable market risk if these drugs reduce the need for masks [4] Industry Impact - Eli Lilly's Zepbound has shown promise in reducing sleep apnea symptoms, with studies indicating a decrease in airflow restrictions during sleep [5] - The FDA has been approached to add sleep apnea to Zepbound's treatment label, with regulatory action anticipated by the end of 2024 [5]