Eli Lilly weight loss drugs trounce sky-high expectations, stock rises
Eli Lilly beat investor expectations at this week’s American Diabetes Association meeting, cementing its leadership in metabolic medicine and prompting Wall Street analysts to revisit their sales forecasts. Analysts generally said the news could lend support to Eli Lilly’s stock price, which has risen more than 26 percent this year. At least one analyst thought the news was enough to immediately adjust his long-term sales forecast. These updates include Phase 2 approvals for the weight-loss drug forforglipron, an oral GLP-1 receptor agonist, and retatrutide, a next-generation triple-agonist that combines three incretin hormones (GLP-1, GIP and glucagon) New data from the study. Analysts were encouraged by results from two early trials. In the case of Orforglipron, overweight or obese patients finally have an easier way to take their GLP-1 drug. Currently, these drugs are typically delivered via weekly injections. LLY Shares of Lilly hit a new 52-week high in Tuesday’s session so far this year. Even more impressive were the results of the retaglutide study, which raised the bar for efficacy. Patients in the study lost an average of more than 24 percent of their body weight at the end of 48 weeks. What’s more, some showed no signs of plateauing in weight loss, suggesting they could continue to lose weight. The drugs could further Lilly’s success with tezeparatide, a GLP-1 drug approved to treat type 2 diabetes under the brand name Mounjaro. The drug is expected to be approved as a weight loss treatment by the end of this year, joining Novo Nordisk’s Wegovy and Ozempic in the market. Both use semaglutide, but Ozempic is marketed as a type 2 diabetes treatment, while Wegovy is primarily used for weight loss. All-time high Shares of Eli Lilly hit an intraday all-time high of $467.98 in Tuesday’s trading before closing up 2.6 percent at $464.65. Earlier in the day, Barclays analyst Carter Gould raised his price target on Lilly shares to $500 from $420, implying a 10% upside from Monday’s close. Gould now expects sales of Lilly’s incretin drug portfolio to reach $49 billion in 2030, up from a previous range of $38 billion to $40 billion. “In practice, we now simulate the rise of Mounjaro and the subsequent share shift of a second wave of assets over the decade, with Mounjaro peaking at about $27.7 billion in 2028, and we model the next wave of assets in 2028 $32 billion a year. $42 billion in 2030 and $42 billion in 2032,” Gould wrote in a research note. “We forecast a combined Mounjaro + Orforglipron + Retatrutide portfolio of $4.8-49 billion between 2030 and 2032, but with lower pricing.” Gould said orforglipron appears to be a “best-in-class” oral drug. Many analysts believe oral GLP-1 drugs are helpful for patients who don’t want injections. Analysts also said the oral drug would help alleviate persistent supply bottlenecks in the category. Bank of America’s Geoff Meacham said retaglutide’s weight loss effects “exceeded expectations.” He noted that most other trials included a larger proportion of women, who tended to lose a greater proportion of their weight during the study period. “This is important because while an overall weight loss of 22.4% is impressive, looking at men and women alone, weight loss was 21.9% and 28.5%, respectively, while the slope for women had not yet plateaued. Furthermore, 100% of patients ≥5% weight loss and 26% of patients lost ≥30% body weight, which we think is quite impressive,” Meacham said, reiterating his Buy rating and $500 price target on Lilly . Also notable in the retaglutide trial was the typical reduction in liver fat of more than 5 percent in some patients with nonalcoholic fatty liver disease, analysts said. “Given these results, we believe retaglutide may play a role in the pre-fibrotic NASH market (which is largely tied to the drug’s core obesity/ T2D potential indications overlap).” Schott also described the weight loss as “impressive” and said it could rival Novo’s next-generation drug CagriSema, which is expected to lose more than 25% by the time of its next update . Forming a duopoly Several analysts said the market appeared to be forming a duopoly between Novo Nordisk and Eli Lilly. BMO Capital Markets analyst Evan David Seigerman expects Eli Lilly to dominate the space in the 2030s. He sees the Indianapolis-based drugmaker as an outperformer with a price target of $505. “These data firmly place Lilly at the forefront of the ‘metabolic revolution’ driven by incretin therapy,” Segerman wrote. “We modeled Lilly’s broader GLP-1RA+ franchise as a >$50B opportunity across the Metabolism franchise, including those with retaglutide (triple G) and oral (anchored by orforglipron ) advantage.” “These data validate our thesis of continued dominance, as well as the addressable market that appears to be expanding, with options that could drive access and extend the duration of treatment.” Morgan Stanley analyst Terrence Terence Flynn, who has a $507 price target on Eli Lilly stock, said he was modeling the launch of oral GLP-1 orforglipron and retatrutide (GGG) in 2026 and 2027, respectively. — CNBC’s Michael Bloom contributed to this report.
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