Eli Lilly Sets New Bar In Weight Loss And Nears Record High; Novo Nordisk Slips

Eli Lilly's (LLY), stock edged closer to a record Tuesday after setting a new standard among weight loss drugs.

The company reported late Monday that patients without diabetes diagnosed with obesity, or overweight, lost on average 24,2% of their weight over the course of 48 weeks after taking Lilly’s next-generation antiobesity medication, retatrutide.

In a client note, SVB Securities analyst David Risinger stated that this helps Eli Lilly "take the lead in obesity". Lilly's diabetes drug Mounjaro -- which is also being tested as a weight loss drug -- has led to a 22.5% average weight reduction over 72 weeks.

Cagrisema, the next-generation drug for weight loss from Novo Nordisk (NVO), also shows promising results. Patients with type 2 diabetics who took cagrisema lost 16% of weight in 32 weeks. Risinger reported that patients with type 2 diabetes who took Lilly retatrutide over a 36-week period lost 17% on average of their body weight.

Eli Lilly's stock fluctuated in the morning trade on today’s stock exchange. Recent action saw shares rise 0.9% at 456.80. Stocks of Novo Nordisk, however, fell 1.6% at 154.80.

Eli Lilly Stock: A Strong Pipeline in Obesity Treatment

Umer Raffat, Evercore ISI analyst and obesity expert, said that Eli Lilly’s pipeline is "much stronger than was understood" in a note to clients.

Lilly, along with its competitors, is developing weight loss drugs that target GLP-1 (glucagon-like-peptide-1) receptor. This hormone affects appetite and the speed at which the stomach empties. Mounjaro targets a second area, whereas retatrutide focuses three areas to improve weight loss.

Lilly may see further improvements in retatrutide's effectiveness in the future. In Lilly's research, the researchers enrolled roughly an equal number of women and men. Other studies, however, enrolled a higher number of women who are more likely to lose weight when taking these types of medications. Only two thirds of patients received the maximum dose of retatrutide.

Raffat explained that this "basically" meant they had left something (effectiveness), on the table. With a slightly revised dose, maybe more patients will be on the target high dosage in future studies.

He maintained his rating of Eli Lilly.

Oral weight-loss drugs: The Battle for Success

Raffat stated that Lilly appears to be leading the way in the oral GLP-1 field.

Pfizer (PFE), a pharmaceutical company, dropped the once-daily tablet on Monday due to liver toxicity issues. The company will instead focus on its twice daily pill. Pfizer is now at a disadvantage in the oral weight loss drug market compared to Lilly and Novo.

Raffat stated that "this puts Lilly at the forefront of synthetic orals."

MarketSmith.com reported that in early trading Tuesday, Eli Lilly's stock was above a buy-point at 375.25 cents out of the cup base.