BofA defends Eli Lilly following selloff on weight loss pill trial data

Shares of Eli Lilly (LLY) are underperforming on Thursday after the company reported quarterly results and announced data from a late-stage trial of its under-development obesity pill. The highest dose of its daily obesity pill helped patients lose about 12% of their body weight, or nearly 27 pounds, at 72 weeks, but Wall Street analysts were expecting for Lilly’s oral GLP-1 results to come in nearer to 15% weight loss. Shares of competitor Novo Nordisk (NVO) jumped following the news, while H.C. Wainwright said that rival Viking Therapeutics’ (VKTX) VK2735 “remains a standout” among competitors’ drugs.

Defending Eli Lilly, BoFA calls today’s stock decline “way overdone,” creating “a particular opportunity” as the firm believes Lilly indisputably “remains in pole position in obesity.”  

Q2 RESULTS: Eli Lilly reported Q2 EPS of $6.31 and Q2 revenue $15.56B, both better than the expected $5.59 and $14.67B, respectively. The company also raised its FY25 EPS view to $21.75-$23.00 from $20.78-$22.28, with consensus at $21.98, and raised its FY25 revenue view to $60B-$62B from $58B-$61B, with consensus $60.09B.

Alongside earnings, Eli Lilly announced topline results from the Phase 3 ATTAIN-1 trial, evaluating orforglipron, an investigational oral glucagon-like peptide-1 receptor agonist, in 3,127 adults with obesity, or overweight with a weight-related medical problem and without diabetes. At 72 weeks, all three doses of orforglipron, met the primary endpoint and all key secondary endpoints compared to placebo, delivering clinically meaningful weight loss as an adjunct to a healthy diet and physical activity. For the primary endpoint, orforglipron 36 mg, taken once per day without food and water restrictions, lowered weight by an average of 12.4% compared to 0.9% with placebo using the efficacy estimand.

In the ATTAIN-1 trial, orforglipron met the primary endpoint of superior body weight reduction compared to placebo. Participants taking the highest dose of orforglipron lost an average of 27.3 lbs at 72 weeks using the efficacy estimand. In a key secondary endpoint, 59.6% of participants taking the highest dose of orforglipron lost at least 10% of their body weight, while 39.6% lost at least 15% of their body weight. 

In addition to achieving significant weight loss, orforglipron was also associated with reductions in known markers of cardiovascular risk, including non-HDL cholesterol, triglycerides and systolic blood pressure in pooled analyses across all doses.

THESIS CHANGED: Leerink downgraded Eli Lilly to Market Perform from Outperform with a price target of $715, down from $944. Following “disappointing” initial results for orforglipron, the company’s oral GLP-1, the firm is lowering its long-term projections and notes that its “investment thesis has changed” as it no longer expects upward pressure on long-term consensus expectations. The firm also notes that Lilly’s major competitor Novo Nordisk is struggling and may need to continue to use price to compete in its duopoly while the firm expects growing competition from various competitors starting late decade.

STOCK MOVE OVERDONE: BofA called Eli Lilly’s Q2 report and FY25 guidance raise “refreshing” when compared to weight loss drug peer Novo Nordisk’s “troubled Q2,” adding that Lilly’s report featured “No major surprises.” While admitting after the earnings report and the company additionally reporting headline results from its Phase 3 oral GLP1 orforglipron study in obese patients that Lilly is “not for the faint at heart,” the firm sees today’s 15% decline as “way overdone” and “creating a particular opportunity” as it argues that Lilly indisputably “remains in pole position in obesity.” BofA maintains a Buy rating and $1,000 price target on Lilly shares.

HOLDS STRONG: H.C. Wainwright believes Viking Therapeutics’ (VKTX) VK2735 remains a standout among competitors after Eli Lilly’s data was released today from its Phase 3 ATTAIN-1 trial. The firm notes investors did not react positively to the data, and notes that on the flip side positive sentiment for Viking stock can also be seen this morning. The dropout rate stands out to Wainwright, especially when comparing this to Viking’s oral VK2735 Phase 1 data that saw similar or better adverse-related discontinuation rates up to the highest dose of 100 mg over a 28-day period. The firm has a Buy rating on Viking’s shares with a price target of $102.

PRICE ACTION: In morning trading, shares of Eli Lilly have dropped over 14% to $640.01.