Lilly shares surge on promise of weight-loss pill

Eli Lilly’s experimental pill led to weight loss of nearly 8% at the highest dose and lowered blood sugar in patients with type 2 diabetes in a late-stage trial, the company said this week.

Shares jumped 13.7% as the results of the long-awaited trial, the first of several under way on the pill, orforglipron, raised hopes of an effective and easy-to-use treatment reaching a market dominated by weight-loss injections.

Lilly was set to add more than $90bn (about R1.69-trillion) to its market capitalisation if the gains hold. Several companies around the world are developing weight-loss pills, a more convenient option to injections, encouraged by estimates that sales of obesity treatments could hit $150bn (R2.82-trillion) in the coming years. The data helps Lilly pull ahead in the race for effective oral drugs that can compete with injections.

Lilly also said orforglipron’s safety profile was consistent with other drugs belonging to the class of weight-loss treatments known as GLP-1s, allaying some worries over a potential stumbling block to sales.

The “data is fantastic from an efficacy standpoint”, said Kevin Gade, CEO at Bahl & Gaynor, which owns Lilly’s shares. Lilly said it would report data from another trial for the pill for weight management later in the year. It plans to file for approval with global regulators for weight loss by the end of this year and for diabetes next year.

With some concern of elevated rates of nausea and vomiting heading into today’s readout, these result firmly validate the tolerable profile of orforglipron

—  Evan Seigerman, BMO Capital Markets analyst

“While this trial alone is very good, this just bodes extremely well for their trial in obesity patients,” said Gade.

The late-stage trial found that between 13% and 18% of patients given the drug experienced nausea across doses, compared with 2% on placebo. The rate for diarrhoea was 19% to 26% and vomiting 5% to 14%.

“With some concern of elevated rates of nausea and vomiting heading into today’s readout, these results firmly validate the tolerable profile of orforglipron,” said BMO Capital Markets analyst Evan Seigerman.

On Monday, Pfizer discontinued development of its experimental weight-loss pill danuglipron after a trial patient experienced potential drug-induced liver injury that resolved after the medication was stopped.

Lilly said no liver-related safety signal was observed in its trial. The company said 8% of patients on orforglipron’s highest dose discontinued treatment due to adverse events. Levels of HbA1c, a measure of blood sugar over time, fell by an average of 1.3% to 1.6% across doses.

Analysts at TD Cowen, in a recent research note, said a “rough bar” for the orforglipron trial was HbA1C lowering of 2%, weight loss of 7% and a discontinuation rate of 9%. After 40 weeks of treatment in the multi-dose trial, Lilly said the once-daily orforglipron showed body weight reductions of 4.7% at 3mg, 6.1% with 12mg, and 7.9% with 36mg. Patients on placebo lost 1.6%.

Data from rival Novo Nordisk’s mid-stage trial of its pill came in below market expectations last year. Novo’s shares slipped 1%, while those of smaller drug developer Viking Therapeutics were down 7%.

Lilly said it was confident in its ability to launch orforglipron worldwide without supply constraints, if approved. The company recorded $550m (R10.35bn) related to the drug’s inventory in its financial statements in February, a filing showed.

It currently sells injectable tirzepatide — the active ingredient in its diabetes drug Mounjaro and obesity treatment Zepbound — which mimics natural peptide hormones GLP-1 and GIP. 

Reuters