Stock prices for Eli Lilly slide due to underwhelming results in obesity medication trial; investigating potential alternate treatments.
In a recent development, Eli Lilly's shares have taken a dip, trading near $640, below even the most conservative analyst targets. This decline comes after the company's oral obesity drug, orforglipron, demonstrated clinically meaningful weight loss but fell slightly short of market expectations.
The positive 72-week Phase 3 ATTAIN-1 trial results showed that orforglipron offered an average weight loss of 12.4% (27.3 lbs) at the highest 36 mg dose compared to placebo. The drug's safety profile was consistent with injectable GLP-1 therapies, marking a key milestone towards a regulatory submission planned for late 2025.
However, orforglipron's weight loss efficacy at 72 weeks is slightly lower than Lilly's earlier 36-week Phase 3 data (14.7%) and trails the 12.7% placebo-adjusted weight loss achieved by Novo Nordisk’s oral GLP-1 at 68 weeks, a leading competitor in the obesity drug market. This gap has led to some investor disappointment, reflected in Lilly’s share price drop.
Despite this, orforglipron's oral, once-daily dosing without food or water restrictions offers a notable convenience advantage over injectable therapies, potentially broadening patient accessibility and adherence. Lilly's substantial investment in manufacturing and preparation for launch underlines confidence in meeting expected demand and expanding their obesity treatment portfolio.
Investors will closely monitor FDA reviews for upcoming drug indications, watch the market reaction to ongoing GLP-1 competition, and observe new data from longer-term obesity and diabetes trials. They will also keep an eye on updates on supply chain and manufacturing capacity for high-demand products.
Analysts TD Cowen and Jefferies have reaffirmed a Buy rating for Eli Lilly with a $960 and $905 target respectively. They emphasized continued expansion in the cash-pay market and highlighted expected increases in vial-based sales. Despite the short-term market enthusiasm being tempered by orforglipron's efficacy being somewhat behind competitors, its oral dosing forms a strategic differentiator that could positively impact Lilly's market position and financial performance.
Recent filings show an uptick in insider share sales, raising questions about internal confidence. However, the resilience in Zepbound and tirzepatide sales despite formulary changes indicates a strong performance in other areas of Lilly's portfolio.
In summary, while orforglipron has delivered strong and clinically meaningful long-term weight loss results with a tolerable safety profile, its efficacy being somewhat behind competitors may temper short-term market enthusiasm. Nonetheless, its oral dosing forms a strategic differentiator that could positively impact Lilly's market position and financial performance, especially if regulatory approval is secured and the drug gains traction with patients seeking alternatives to injectables.
- The margin between the weight loss efficacy of Eli Lilly's orforglipron and that of Novo Nordisk's oral GLP-1 has led to some investor disappointment, potentially affecting the company's finance and business prospects.
- Despite the slight shortfall in orforglipron's weight loss efficacy compared to competitors, its oral, once-daily dosing could serve as a strategic differentiator that positively impacts Eli Lilly's market position and financial performance.
