These are heady days for Eli Lilly (NYSE: LLY). New medicines are launching, investments in manufacturing are paying off, and additional clinical trials point to the possibility of more revenue in the future. It seems like there's a fresh reason to be even more bullish about the stock every single week.

This past week was no exception to the trend. Here's why.

The size of its addressable market may increase yet again

Lilly's medicines Zepbound and Mounjaro are approved today to treat, respectively, obesity and type 2 diabetes. Both therapies have the same active ingredient, which is called tirzepatide. In the second quarter alone, Zepbound brought in $1.2 billion in sales, while Mounjaro brought in nearly $3.1 billion, making the pair fit the definition of blockbuster medicines.

Thanks to the company's ongoing research and development (R&D) activities to investigate additional applications for tirzepatide, there's a very good chance it'll continue to get additional indications approved by regulators. This would expand the addressable market significantly and generate even more revenue.

On that note, Eli Lilly has been running a phase 3 clinical trial investigating tirzepatide in preventing the development of type 2 diabetes, rather than merely treating it. Per the top-line results, Lilly may soon be able to market the drug for yet another indication.

In the trial of 1,032 pre-diabetic adults who were overweight or who met the clinical definition of obesity, treatment with tirzepatide once per week for 176 weeks led to a 94% lower risk of progressing to diabetes. Study participants receiving the highest dose tested also lost an average of 22.9% of their body weight in the same period. Lower doses resulted in less weight loss, but they did not appear to affect the degree of risk reduction for progression to diabetes.

There's a lot of important information to unpack here.

First, while third parties haven't had the opportunity to review Lilly's data because it hasn't yet been published in full in a scientific journal, the announcement suggests an incredibly effective method for preventing type 2 diabetes in people who would normally be considered high-risk. The implication is that the addressable market of tirzepatide could soon be expanded to include many or even all overweight people, as being overweight is a major risk factor for developing type 2 diabetes.

According to the National Center for Health Statistics at the Centers for Disease Control and Prevention (CDC), an estimated 73.6% of U.S. adults aged 20 or older meet the criteria for being either overweight or obese. That's a much larger slice of the population than the 41.9% of adults it estimates to be obese.

The second important finding of the trial actually happened afterward, during a 17-week follow-up period. In that period, participants began to regain the weight they'd lost, and some went on to develop type 2 diabetes. Therefore, to continue warding off diabetes, patients would probably need to take tirzepatide on an ongoing basis. For shareholders there's no better conclusion, as it implies a consistent revenue stream from each new patient.

There's no way the opportunities end here

The full results of the trial will be submitted for publication in a scientific journal, and also presented at the ObesityWeek conference in early November. It wouldn't be too surprising if Lilly's share price climbed a bit when the full account is published or presented.

But even if the trial seems to support a maximalist vision for tirzepatide's addressable market, there's no guarantee that regulators will ultimately agree. Nor is it a sure thing that people who think of themselves as being relatively healthy (save for being overweight) would seek treatment, or be referred for treatment by their doctors, for the purpose of preventing type 2 diabetes.

Still, it's hard to deny that Eli Lilly's stock keeps getting sweeter as it invests more and more work into understanding the full capabilities of its own medicine. There is no chance that this is the last indication it will research and then attempt to commercialize. And, if its efforts so far prove anything, there's a very high chance that it will succeed with this attempt, and probably others as well.

So should you buy Eli Lilly stock based on this new finding? If you were on the fence before, take this as a sign that the answer is "yes."

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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Eli Lilly's Stock Keeps Looking Better and Better. Here's the Latest Reason Why. was originally published by The Motley Fool