Morningstar

Eli Lilly: Strong Orforglipron Data in Second Obesity Trial Support On-Schedule Regulatory Filings

Lilly shares rose nearly 5% and Novo shares fell a similar amount in intraday trading.

Eli Lilly and Company, Pharmaceutical company headquarters.
Cristina Arias/Cover via Getty
Securities in This Article
Eli Lilly and Co
(LLY)
Novo Nordisk AS ADR
(NVO)

Key Morningstar Metrics for Eli Lilly

Eli Lilly LLY reported on Aug. 26 that oral GLP-1 drug candidate orforglipron generated 8.3% placebo-adjusted weight loss at 72 weeks at the highest 36 mg dose among compliant patients with obesity or overweight and Type 2 diabetes in the Attain-2 study.

Why it matters: On the heels of data from orforglipron’s first obesity study, Attain-1, earlier in August, Attain-2 gives Lilly the data necessary to file for approval of orforglipron this year. Lilly shares rose nearly 5% and Novo Nordisk NVO shares fell a similar amount in intraday trading.

  • Weight loss in Attain-2 was slightly below the 11.5% placebo-adjusted weight loss at the same time point and dosage in the Attain-1 study, but this was expected, as Attain-1 patients were not diabetic, and diabetic patients typically have more difficulty losing weight.
  • While Attain-1 data looked slightly worse than Novo’s 25 mg dose of oral semaglutide in the Oasis 4 clinical trial, we think Attain-2 data look promising, given weaker 68-week placebo-adjusted weight loss for Wegovy in Step 2 (7.5%) and total weight loss for 25 mg oral sema in Pioneer Plus (7%).

The bottom line: We’re maintaining our $650 fair value estimate for wide-moat Lilly, including our assumptions for more than $60 billion in peak tirzepatide sales and $20 billion orforglipron sales. Shares look relatively fairly valued at recent prices.

  • We still think that Novo’s oral semaglutide will be a significant competitor in the oral obesity market in the US, with approval expected ahead of Lilly (later this year) and slightly stronger data in its main obesity/overweight trial.
  • That said, we assume peak sales for oral semaglutide (including the new 25 mg dose and Rybelsus in diabetes) of roughly $10 billion, as we think easier manufacturing for Lilly’s small molecule than Novo’s oral peptide could allow it to see a more rapid global launch.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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