By Bhanvi Satija

Dec 20 (Reuters) - The U.S. Food and Drug Administration

on Friday approved Eli Lilly's ( LLY ) weight-loss treatment,

Zepbound, for obstructive sleep apnea, making it the first drug

greenlighted to directly treat patients with the common sleeping

disorder.

The regulator approved the drug for moderate to severe

obstructive sleep apnea in adults with obesity, the company

said.

The approval opens up a wide market of patients for

Lilly at a time when demand for Zepbound is already surging.

It could also strengthen Lilly's case with commercial

insurers and employers, who have previously hesitated to cover

the drug due to its high cost.

Shares of the Indianapolis-based drugmaker were up 1.14% in

after-market trading following the announcement.

Sleep apnea patients stop breathing briefly while sleeping,

disturbing the sleep cycle and causing long-term complications

such as heart conditions. The condition affects roughly one

billion people globally.

"Too often, obstructive sleep apnea is brushed off as 'just

snoring' - but it's far more than that," said Julie Flygare, CEO

of non-profit organization Project Sleep.

Common treatments for the condition include CPAP

machines, which involve wearing a mask over the face while

sleeping, surgery, as well as losing weight.

Zepbound and Lilly's widely used diabetes drug, Mounjaro,

both chemically called tirzepatide, belong to a class of drugs

called GLP-1 agonists.

Originally developed for type 2 diabetes, they also reduce

food cravings and cause the stomach to empty more slowly.

U.S.-based Lilly and Danish rival Novo Nordisk

are testing their blockbuster obesity drugs for a range of

conditions as they race to show that they have other health

benefits.

Regulators can expand approval for medicines if new data

shows them to be effective in other therapeutic areas.

The FDA's approval is based on data from two trials

involving 469 participants, in which Zepbound helped ease

breathing difficulties in patients with moderate to severe

obstructive sleep apnea.

The drugmaker published the full data in June, showing the

drug helped resolve the disorder in up to 52% of patients in

these trials.

Trial data also showed that Zepbound lowered the so-called

biomarkers of sleep apnea, including low blood oxygen and blood

pressure, which can indicate heart disease.

Government-backed Medicare plans for adults aged 65 and

older and those with disabilities are barred from covering

weight-loss treatments, though the Biden administration has

proposed to

expand the coverage

of anti-obesity drugs.

If President-elect Donald Trump's incoming

administration backs the move, the program would be effective

from 2026.

Medicare only began covering Novo Nordisk's

Wegovy after it gained approval for reducing the risk of heart

attacks and strokes in March.