Lilly shares soar on new weight-loss pill that looks to pass Ozempic

By Madison Muller | Bloomberg

Eli Lilly & Co. shares surged after its experimental pill helped patients shed weight and control blood sugar about as well as Ozempic, an advance that could turbocharge what’s already one of the fastest growing markets in medicine.

The triumph of Ozempic, the blockbuster diabetes shot from Novo Nordisk A/S, and related drugs including Zepbound and Mounjaro from Lilly, has set off an all-out push to develop a pill that’s easier to take and less expensive to make. While rivals including Pfizer Inc. have suffered setbacks, analysts said success is critical to creating the $130 billion market they predict by the end of the decade.

Results of the Lilly-funded study provide a promising first look. Diabetics given the pill called orforglipron lost 16 pounds, or 7.9% of their body weight, over a 40-week period. That was more than similar patients shed in earlier studies of Ozempic. Those getting the pill hadn’t hit a weight plateau when the study ended, suggesting they may lose even more, the company said in a statement. Blood sugar levels fell by an average of 1.3%, slightly underperforming rival injections.

Analysts hailed the results, which pushed Lilly’s shares up as much as 17%, the most intraday since August 2023. Novo’s American depositary receipts plunged as much as 8.9%.

“The data presents a best-case scenario for a blockbuster launch out of the gate,” Jefferies analyst Akash Tewari wrote in a note to investors. Jared Holz, a health-care specialist at Mizuho, said Lilly “will remain the preeminent player in this category for a while as its lead over peers, both in Pharma and Biotech, widens on the back of this data.”

The trial isn’t definitive, however. It’s one of several that Lilly is running in diabetes, obesity and other related conditions like sleep apnea. Its main obesity trial won’t wrap until at least July, according to a clinical trial database, and those results are among the most anticipated of the year. Lilly could launch the medicine as soon as early 2026, according to Chief Executive Officer Dave Ricks.

Blockbuster boom

Obesity shots made by Novo and Lilly have been wildly popular, generating billions of dollars in sales. But drugs that can be taken by mouth, rather than injected, are considered the next frontier. The science, however, can be daunting.

Pfizer, which once angled for second place, was forced to abandon its most advanced candidate after one patient in a clinical trial developed signs of liver injury. Smaller biotechnology companies, and large pharmaceutical rivals including AstraZeneca Plc, are still working on their own weight-loss pills, with varying degrees of success.

Lilly, which was second to the market that Novo created more than a decade ago with the introduction of Saxenda and then Wegovy, has quickly closed the gap and made prescient moves that may help it pull ahead of its Danish rival. It licensed orforglipron from Japanese drugmaker Chugai Pharmaceutical Co. in 2018, and negotiated a royalty rate “from mid single digits to low teens,” less than analyst expectations.

Fast filing

The company is moving quickly: It expects to submit orforglipron for weight management to regulators by the end of this year, with the application for Type 2 diabetes anticipated to come in 2026, the company said in the statement.

The data supports “potential blockbuster status,” Bloomberg Intelligence’s John Murphy wrote in a note, with competitive effectiveness and no apparent safety signals. The results were toward the top-end of expectations and the limited safety data suggest good tolerability, he said.

A pill, which is normally easier to make than an injection, may also help Lilly with supply issues. Both Lilly and Novo struggled to produce enough of their weight-loss shots to meet market demand for the past several years, which allowed compounding drugmakers to legally craft less expensive versions they could sell to patients.

Lilly said it’s confident it will be able to launch orforglipron worldwide without supply constraints if the medicine is approved.

More data

The longer-term results of the study and additional trials may provide better information on what patients could eventually expect from the pills. People with diabetes typically have a harder time shedding pounds, and Lilly executives have warned that results from this trial shouldn’t be used to directly assess the drug’s weight-loss potential.

Its safety profile was consistent with existing therapies, said Lilly. The most common side effects were gastrointestinal issues, which were “generally mild to moderate in severity,” the company said. Treatment discontinuation rates were 8% at the highest dose and 6% at the lowest one. There were no signs of liver damage.

–With assistance from Ashleigh Furlong and Damian Garde at Bloomberg.