Eli Lilly's late-stage study results reveal that its experimental oral weight loss medication orforglipron achieved approximately 11% weight reduction in patients, falling below Wall Street expectations. Investors had anticipated that Eli Lilly's drug would match the effectiveness of Novo-Nordisk A/S's popular weight loss injection Wegovy. Following the announcement, Eli Lilly shares dropped 7% in pre-market trading while Novo-Nordisk A/S surged 7%, with both stocks having reached moves exceeding 12% earlier in the session.
Simultaneously, Eli Lilly reported better-than-expected second-quarter results and raised its full-year revenue and profit guidance. In the trial, patients taking the highest dose of orforglipron experienced an average weight loss of 12.4% over 72 weeks. At least three analysts indicated that the market had expected orforglipron to achieve weight loss comparable to Novo-Nordisk A/S's Wegovy, which demonstrated 14.9% weight reduction over 68 weeks in 2021 trials, with some analysts predicting the drug would outperform Novo-Nordisk A/S's popular product.
**Eli Lilly Q2 Results Exceed Expectations, Full-Year Guidance Raised**
For the second quarter, Eli Lilly generated revenue of $15.6 billion, representing approximately 38% year-over-year growth. The company's obesity drug portfolio performed exceptionally well, primarily driven by diabetes medication Mounjaro and weight loss therapy Zepbound, contributing over $8 billion in revenue due to robust demand.
Mounjaro achieved approximately $5.2 billion in revenue, marking 68% year-over-year growth, while Zepbound generated around $3.4 billion, representing 172% year-over-year increase and surpassing analyst projections of approximately $3.1 billion. Additionally, the company's breast cancer treatment Verzenio contributed approximately $1.5 billion in revenue, up about 12% year-over-year.
Eli Lilly's adjusted gross margin improved from 82% in the previous year to 85%, while the company's non-GAAP earnings per share increased 61% year-over-year to $6.31, exceeding market expectations by $0.72.
Looking ahead, Eli Lilly raised its full-year profit outlook, expressing optimism about significant demand growth for its popular weight loss drug Zepbound while planning to expand into new markets and capture additional market share from Novo-Nordisk A/S's Wegovy. The company now expects adjusted earnings per share for this year to range between $21.75 and $23.00, compared to previous expectations of $20.78 to $22.28 per share. According to LSEG data, analyst expectations stand at $21.74.
Eli Lilly also increased its 2025 revenue outlook midpoint by $1.5 billion to $60-62 billion, compared to market expectations of $60.1 billion.
Eli Lilly and Novo-Nordisk A/S compete in the rapidly growing weight loss drug market, specifically the GLP-1 agonist market, which is projected to generate over $150 billion in revenue over the next decade. In pivotal trials, patients using Wegovy achieved approximately 14% to 15% weight loss, though slightly less effective than Eli Lilly's competing injection Zepbound.
Last week, Novo-Nordisk A/S again lowered its profit expectations for this year due to slower-than-expected growth in the U.S. market and competition from cheaper compounded versions of Wegovy from pharmacies.
**New Competition Arena: Oral Weight Loss Medications**
While injection therapies from Eli Lilly and Novo-Nordisk A/S have revolutionized obesity treatment, investors believe oral medications are key to benefiting more patients. This market is expected to reach $95 billion by 2030.
However, scientific research has revealed numerous challenges. Several companies including Pfizer and AstraZeneca have encountered setbacks in their race to develop potent oral medications.
Dr. Katherine Saunders, co-founder of Flyte Health and obesity physician, stated that as long as the medication is safe and effective, doctors will prescribe it regardless of whether it meets investor expectations for weight loss effectiveness. She was not involved in this study.
In a statement detailing the study results, Eli Lilly noted that the most common side effects were nausea, vomiting, and diarrhea, occurring at rates similar to existing GLP-1 medications. Importantly, orforglipron did not cause liver problems, a concern facing other weight loss drugs under development. Approximately 10% of patients withdrew from the study due to side effects.
The company plans to submit results from this 18-month study involving over 3,100 adults to regulators by year-end for approval, with detailed results to be presented at a medical conference in September. If approved, this once-daily pill could reach market next year.
Orforglipron is less complex to manufacture than Zepbound and is expected to be a more affordable option for patients. Eli Lilly has already made "significant investments" to meet anticipated demand, including stockpiling at least $600 million worth of the drug and active ingredients needed for additional manufacturing, according to recent financial reports.
In previous orforglipron trials, patients with type 2 diabetes achieved 7.6% weight loss over 40 weeks. Eli Lilly noted that these patients had not reached weight stabilization at trial completion, suggesting potential for additional weight loss. Blood sugar levels also improved.
Novo-Nordisk A/S expects to communicate with regulators later this year regarding a higher-dose version of its weight loss medication Rybelsus. Development work on this drug had been stalled due to the company's inability to produce sufficient quantities of semaglutide, the active ingredient used in all its diabetes and obesity treatments.
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