Eli Lilly's stock plunges as investors eye obesity-drug competition

By Eleanor Laise

'Vast' weight-loss drug pipeline keeps Lilly in a strong position as field gets crowded, analysts say

Eli Lilly & Co.'s stock was on pace for its worst day in about three years Thursday as investors fretted about intensifying competition among obesity-drug developers.

Lilly's stock (LLY) was down more than 7% at midday Thursday - on track for its largest percentage decline since March 2021 - before rebounding slightly. The American depositary receipts of rival weight-loss drugmaker Novo Nordisk A/S (NVO) were also hit hard Thursday, falling roughly 5%.

Thursday's declines extended an obesity-drug stock selloff that started Wednesday after Roche Holding AG (RHHBY) announced positive early-stage trial data for its experimental obesity pill.

But analysts remain sanguine on Lilly's shares, pointing to obesity-drug assets that go well beyond its new weight-loss injection Zepbound. The company's obesity pipeline is "vast," Truist Securities analysts said in a research note Wednesday, reiterating their buy rating and $1,000 price target on the shares.

That pipeline includes two experimental drugs in phase 3 development: Orforglipron, a GLP-1 pill, and retatrutide, a more potent treatment nicknamed "triple G" because it mimics three different hormones.

While patients' average weight loss after four weeks of treatment with Roche's experimental drug, CT-996, looks competitive with Lilly's orforglipron and other oral medications in development, Roche's figures are early phase 1 data, BMO Capital Markets analyst Evan David Seigerman said in a research note Wednesday. That makes it difficult to size up any impact on competitors, Seigerman wrote, reiterating his outperform rating on Lilly shares.

Beyond its late-stage weight-loss assets, Lilly has several obesity drugs in earlier stages of development, including the monoclonal antibody bimagrumab, which the company acquired last year with its deal for Versanis Bio, hoping the treatment could help preserve muscle while patients lose weight. Lilly's experimental obesity treatment eloralintide - which, like bimagrumab, is in phase 2 trials - stimulates the hormone amylin, which plays a role in feelings of fullness and glycemic regulation.

Some other weight-loss drug developers also continued to lose ground Thursday. Structure Therapeutics Inc.'s ADRs (GPCR) were down 3.8%, while Altimmune Inc. (ALT) shares fell more than 8%.

Lilly's stock has gained 45% in the year to date, while the S&P 500 SPX is up 16.5%.

-Eleanor Laise

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07-18-24 1321ET

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