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Eli Lilly shares surge on new obesity pill data. What it means for the stock from here

Eli Lilly is tightening its grip on the lucrative weight-loss market as it moves into a new, more convenient phase that promises to broaden the appeal of its breakthrough drugs. The news Club name Lilly said its daily obesity pill was successful in a late-stage trial for Type 2 diabetes — sending shares soaring more than 15% in Thursday’s session. The pill, known as orforglipron, belongs to the booming class of drugs called GLP-1s, which mimic a gut hormone to help regulate blood sugar and effectively suppress appetite. The leading GLP-1s on the market – Lilly’s Zepbound for obesity and Mounjaro for Type 2 diabetes, and Novo Nordisk’s Wegovy for obesity and Ozempic for Type 2 diabetes – are taken as once-weekly injectables. For investors, the most relevant details in Lilly’s press release are about the pill’s tolerability and safety rather than how many pounds patients on the orforglipron pill lost during the trial. The company said the drug’s overall safety profile in the trial was “consistent with the established GLP-1 class,” adding that no concerns about liver safety, in particular, were observed. Part of the reason for this focus is that Type 2 diabetes patients generally lose less weight on GLP-1s than non-diabetics with obesity; a late-stage orforglipron trial that enrolled only people with obesity is due out later this year, and that data will offer a better look at how much weight loss the drug can achieve. There is also some inherent unpredictability with the chemistry behind oral GLP-1s, Lilly CEO David Ricks has said, which added emphasis to the safety profile. To be sure, diabetic patients in the 40-week trial still shed pounds on orforglipron. On average, participants lost 7.9% of their body weight, equal to about 16 pounds. Investors were expecting in the 5% to 6% range, JPMorgan analysts estimated in a note last month, which they said would translate to about 13% to 15% weight loss in the obesity-focused study later this year. The better-than-expected weight loss performance for orforglipron in the diabetes trial and the safety results were fueling Thursday’s stock surge, which pushed the stock up roughly 9.5% year to date in a tough 2025 for the overall stock market. Even with Thursday’s rally, Lilly shares were still about 12% below their record-high close of $960 on Aug. 30, 2024. In a note to clients Thursday, analysts at Leerink said orforglipron showed similar safety and efficacy to Novo’s Ozempic — a highly encouraging sign. Novo is Lilly’s main rival in the GLP-1 market, though a host of drugmakers are hustling to catch up. Novo has a few different weight-loss pills in clinical trials, but its stock was down more than 8% on Thursday, an indication that investors are worried about what Lilly’s data means for the Danish drugmaker. LLY NVO 1Y mountain Eli Lilly vs. Novo Nordisk 1 year Big picture Drugmakers and investors alike view weight-loss pills as an important new frontier for the fast-growing obesity market. In a CNBC interview earlier this year , Lilly’s chief scientific officer, Dan Skovronsky, explained why these types of drugs should be helpful to both patients and the company, which has faced numerous supply constraints in trying to meet demand for injectable GLP-1s. “I’m excited about [orforglipron] not because it’s going to give more weight loss or better tolerability or anything like that — just because it’s a pill and it’s oral and that could help a lot of people who may be reticent to use an injectable or may live in parts of the world where it’s hard to have cold-chain shipping. It’s easier to make, et cetera,” Skovronsky said. In addition to expanding the obesity market to people who either don’t want to take injectables or struggle to access them, weight-loss pills could also be used in a so-called maintenance regime. The idea is that some people may start on an injectable like Zepbound, taking advantage of its higher efficacy, and then at a certain point they can shift over to orforglipron to help keep the weight off. Lilly’s data comes a few days after Pfizer said it was scrapping its oral GLP-1 drug for obesity, known as danuglipron, following a late-stage study in which one patient may have developed a drug-induced liver injury. Pfizer has another weight-loss pill earlier in development that targets a different hormone than GLP-1, and it could look to acquire other experimental drugs from smaller players. In a note to clients Monday, analysts at Bernstein said Pfizer’s setback gives Lilly “more time … as the clear incretin leader, complementing their injectable dominance.” Incretin is another name used for GLP-1 drugs. Eli Lilly’s first-quarter earnings report on May 1 will help shine a light on the performance of Mounjaro and Zepbound, along with how executives are thinking about other overhangs on pharmaceuticals such as tariffs and the evolving regulatory landscape in Washington with industry critic Robert F. Kennedy Jr., now leading the Department of Health and Human Services. The Trump administration has said it is preparing “sectoral” tariffs on pharmaceuticals, though details are still light on what those will look like. Bottom line Eli Lilly fortified its strong standing in the obesity drug race — orforglipron cleared the bar on safety, and exceeded expectations on weight loss, which bodes well for what the obesity-focused trial will show later this year. “It became a one-horse race after this,” Jim Cramer said on Thursday’s Morning Meeting, though he did caution that Kennedy running HHS has made the regulatory climate toward obesity drugs more uncertain than before. Still, based on what we currently know, orforglipron looks like a safe and effective weight-loss pill that can help the obesity market reach its full commercial potential in the years ahead. Notably, Lilly has strategically been stockpiling orforglipron inventory, which could help the company hit the ground running upon receiving approval from U.S. regulators. Lilly expects to file orforglipron for obesity approval later this year, followed by a submission for Type 2 diabetes in 2026. (Jim Cramer’s Charitable Trust is long LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Eli Lilly and Company, Pharmaceutical company headquarters in Alcobendas, Madrid, Spain.

Cristina Arias | Cover | Getty Images

Eli Lilly is tightening its grip on the lucrative weight-loss market as it moves into a new, more convenient phase that promises to broaden the appeal of its breakthrough drugs.

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