RBC says small surprise in Lilly’s trial could be viewed as positive for ResMed

RBC Capital notes that Eli Lilly (LLY) has released positive topline results from its SURMOUNT-OSA Phase III trials. The firm had expected a significant reduction in AHI scores of about 50% in the non-PAP therapy arm and therefore, views the topline result of a net 50% AHI reduction as in line with its expectation. However, RBC was surprised that the PAP therapy arm had a greater reduction in AHI scores than the non-PAP arm given the 1-week washout period at the end of the PAP therapy arm. Therefore, this could be viewed as a positive for ResMed (RMD) given the use of Tirzepatide in combination with PAP therapy has resulted in a greater AHI reduction than just using only Tirzepatide. That being said, the results from the SURMOUNT-OSA study support the firm’s view that the overall impact from GLP-1s will be a slight reduction in ResMed’s TAM as some moderate OSA patients drop out of the OSA funnel due to weight loss. RBC has a Sector Perform on ResMed with a price target of $187 on the shares.