3 major diabetes stocks to watch in August

The drugs and medical devices indicated for the treatment of diabetes are a growing sector in the health care sector. In fact, according to a recent EvaluatePharma report on the sector, diabetes products will be the second fastest growing sector in the sector as a whole.

Based on this idea, we asked three of our employees in the Motley Fool health system what they thought diabetes-related titles should be in the radar of all investors in August and beyond. They have chosen Eli Lilly (NYSE: LLY), Abbott Laboratories (NYSE: ABT), and Tandem Diabetes Care (NASDAQ: TNDM). Here's why.

Source of the image: Getty Images.

A confrontation in diabetes care

George Budwell (Eli Lilly): Pharma titan Eli Lilly is undoubtedly a leading diabetes company to watch. In summary, Lilly's shares were under pressure in the second half of 2019 due to concerns over the long-term business fate of its GLP1 agonist, Trulicity.

In summary, Trulicity plays an important role in the company's ability to overcome the vertiginous decline of the former Humalog and Humulin star insulins. Highlighting this point, Trulicity's second-quarter sales jumped 32 percent year-over-year to $ 1.03 billion, making it by far the drug maker's best-selling drug. However, Lilly plans to increase Trulicity's annual sales by another 500% over the next five years, which would allow the company to stay well ahead of the current sales erosion for Humalog and Humulin.

To do this, the drug manufacturer's short-term goal is to expand the Trulicity label to include a higher dose indication for patients with type 2 diabetes and a second label extension indicating that this drug also provides a significant cardiovascular benefit to diabetic patients. Lilly has already submitted Trulicity's cardiovascular test data to the EU and US regulatory authorities for review, and the company is expected to soon review the indication of the highest dose of the drug. drug with regulatory authorities.

The fly in the ointment is that the Danish pharmaceutical giant Novo Nordisk offers three similar products (Victoza, Ozempic and an oral version of Ozempic) that could significantly slow down Trulicity's growth in the coming years. Thus, the exponential growth trajectory of Trulicity is far from a sure thing. Diabetic investors, in turn, will certainly want to keep a close eye on this developing story.

Waiting for a big decision

Keith Speights (Abbott Laboratories): Although Abbott Labs does not focus solely on diabetes, there is no doubt that diabetes care is an important driver of growth for the company. Abbott announced organic sales growth of 70% in the second quarter for its Freestyle Free (CGM) continuous glucose meter.

Customers love Freestyle Libre for its features (in particular, the calibration of the device does not require any finger.) But they also like its value. Abbott Labs President and CEO Miles White said at the company's second quarter teleconference that the CGM system "offers a unique value proposition by design".

I expect that Free Freestyle sales will soon move up a gear. Abbott has filed with the US Food and Drug Administration (FDA) approval for the next-generation version of the device as an integrated continuous glucose monitoring system (iCGM) to be used as a part of the device. integral to an integrated system with other medical devices, such as automated systems. insulin dosing systems and insulin pumps.

There is not yet a specific date to which the FDA will make its decision. However, White has expressed confidence in the second quarter call that Abbott would get approval for the new version of Free Freestyle. The chief operating officer, Robert Ford, added that the company expects this approval "relatively soon".

Abbott also has several other growth drivers aside from diabetes, including its range of Alinity laboratory diagnostic instruments. I suspect, however, that Freestyle Libre's growth story will hold much more investor attention in the coming quarters, making Abbott Labs a diabetes title to watch closely in August and beyond.

A complete medical game on diabetes

Todd Campbell (Tandem Diabetes): Treatment of type 1 diabetes is moving to automated systems that combine a continuous glucose monitor with an insulin pump to keep patients in the desired blood glucose range for longer.

The change was triggered by the launch of Tandem Diabetes' first generation automated insulin device last year. The competition is announcing, but Tandem Diabetes is also about to launch a second-generation system that could allow it to stay ahead of the pack, making it one of the leading titles to watch for in this market. moment.

The company's first system has improved treatment by stopping insulin delivery through the pump if the CGM indicates that the patient is at risk for a dangerous low blood sugar. The second-generation system will develop this technology to also include the automatic increase of insulin to prevent elevations of blood sugar. The demand for the first-generation system was so strong that Tandem revenues jumped 173% year-over-year to reach $ 93 million in the second quarter. The company plans to launch the second-generation system in the fourth quarter, subject to FDA approval.

The availability of a complete system like this later this year will give Tandem Diabetes an important length of advance. Most patients do not exchange their pumps before the end of the warranty period. Since Tandem's guarantee is for four years, the company could make a definite profit from maintaining its market share for years and because only about 30% of the 1.25 million Type 1 patients in the United States United currently follow a pump treatment, many new users are to conquer. , as well.