Can Eli Lilly Keep Up as NVO Eyes First Oral Obesity Pill Approval?
In the first half of 2025, Zepbound generated $5.69 billion in revenues, prompting Lilly to raise its full-year sales guidance to $60-$62 billion from its prior expectation of $58-$61 billion. By comparison, Wegovy recorded sales of $5.41 billion (DKK 36.9 billion) during the same period. Novo Nordisk revised its 2025 sales and operating profit outlook downward due to lower sales expectations from Wegovy as a result of intensified competition, including from compounded GLP-1 alternatives, and slower-than-anticipated market expansion, causing its stock price to plummet.
However, Lilly's dominant position in the obesity market faced a setback last week following underwhelming efficacy results from the ATTAIN-1 study, the first of two pivotal phase III studies of its oral GLP-1 candidate, orforglipron. While the study met its primary and all key secondary endpoints across all three doses at 72 weeks, the 12.4% weight loss achieved with the highest 36 mg dose fell short of investor expectations, who had likely anticipated that orforglipron's efficacy would be more comparable to that of currently approved injectable GLP-1 treatments such as Zepbound and Wegovy.
Investor sentiment was further dampened by the study's high patient discontinuation rates, stemming from both side effects and personal reasons, raising doubts about orforglipron's long-term utility in chronic obesity management. Given the strategic importance of orforglipron within Lilly's obesity pipeline, the perceived performance gap triggered an 18.6% decline in LLY shares over the past week. In response to LLY's setback, Novo Nordisk stock staged a modest recovery, suggesting a shift in market confidence toward its advancing oral obesity treatment programs. In the past week, NVO shares gained 4.7%.
Oral Obesity Pills Emerge as the Next Battleground
Eli Lilly's setback with its oral obesity pill has brought focus to oral treatment options for obesity. Oral pills have the potential to significantly reduce the treatment burden for obesity patients, which is expected to boost adherence over injections. NVO has already completed a regulatory filing seeking the approval of a 25 mg oral semaglutide for obesity, currently under review by the FDA. A decision from the regulatory body is expected by year-end. Potential approval would give Novo Nordisk a notable advantage as the sole manufacturer of a marketed oral obesity pill, positioning it to capture significant market share. Novo Nordisk is also developing a small-molecule oral CB1 inverse agonist, monlunabant, in a mid-stage study for obesity. The company is currently gearing up to advance Amycretin, an investigational unimolecular GLP-1 and amylin receptor agonist, for weight management into late-stage development. The phase III program on amycretin is planned to be initiated during the first quarter of 2026.
Several other companies, like Viking Therapeutics VKTX, are also making rapid progress in the development of GLP-1-based candidates in their clinical pipeline. Recently, Viking Therapeutics started two late-stage studies evaluating the subcutaneous formulation of its investigational obesity drug, VK2735. A mid-stage study is currently ongoing, evaluating an oral version of this obesity drug, with a data readout expected later this year.
LLY's Stock Price, Valuation and Estimates
Shares of Eli Lilly have lost 19% so far this year compared with the industry's decline of 8.3%. The stock has also underperformed the sector and the S&P 500 index during the same time frame, as seen in the chart below.
LLY Stock Price Movement
Image Source: Zacks Investment Research
From a valuation standpoint, Lilly's stock is expensive. Going by the price/earnings ratio, the company's shares currently trade at 22.85 forward earnings, higher than 13.71 for the industry. However, the stock is trading much below its five-year mean of 34.54.
LLY Stock Valuation
Image Source: Zacks Investment Research
Estimates for Eli Lilly's 2025 earnings have improved from $21.92 to $22.11 per share in the past 30 days, and estimates for 2026 earnings have declined from $30.84 to $30.74 over the same timeframe.
LLY Estimate Movement
Image Source: Zacks Investment Research
Eli Lilly currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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