January 15, 2025
Popular obesity stocks fell on Tuesday after pharma giant Eli Lilly LLY lowered its sales guidance for full-year 2024 and announced disappointing preliminary fourth-quarter sales numbers.
Eli Lilly anticipates fourth-quarter revenues to reach approximately $13.5 billion, bringing the full-year total to $45 billion. However, the reported full-year figure fell short of the company’s previously projected range of $45.4-$46.0 billion shared in October. The reported figures also missed the Zacks Consensus Estimate of $13.93 billion for the fourth quarter and $45.44 billion for the full year.
LLY stock fell nearly 7% after this announcement. Management attributed this lowered guidance to the slowed sales growth of its tirzepatide products in the fourth quarter — diabetes drug Mounjaro added $3.5 billion, while obesity drug Zepbound generated $1.9 billion. While sales of both drugs have been rising on a sequential and yearly basis, the reported figures missed the consensus estimate of $4.3 billion for Mounjaro and $2.2 billion for Zepbound.
This is the second straight quarter where LLY’s quarterly top-line results disappointed investors. Similar to third-quarter 2024, management stated that sales of both Mounjaro and Zepbound were hurt by lower-than-expected channel inventory of the products. Eli Lilly is scheduled to report fourth-quarter and full-year 2024 results on Feb. 6, 2025.
However, not all was bad, as LLY issued fresh sales guidance for full-year 2025 between $58 billion and $61 billion. This suggests growth of 32% at the mid-point when compared to the expected 2024 revenues. The Zacks Consensus Estimate for 2025 sales was pegged at $60.26 billion.
Eli Lilly’s announcement also dragged shares of other companies developing/marketing obesity drugs, including Novo Nordisk NVO, Viking Therapeutics VKTX and Amgen AMGN. Investors were spooked as the guidance for both Mounjaro and Zepbound missed expectations and further questioned the industry’s accuracy in forecasting demand for obesity drugs.
Shares of LLY’s biggest rival Novo Nordisk were down 4% on Tuesday. NVO currently markets its obesity drug Wegovy and diabetes drug Ozempic, both of which contain the active ingredient semaglutide — a direct competitor to Lilly’s tirzepatide. Shares of Viking Therapeutics and Amgen, which are currently developing their respective obesity drugs, were down about 13% and 1%, respectively.
Shares of Novo have plunged more than 40% in the past six months. Though the current obesity market is operating like a duopoly between LLY and NVO, Zepbound continues to maintain the best-in-class title for obesity treatment. The highest dose of Zepbound has shown 25% weight loss over a similar duration in a late-stage study compared with 22.7% with CagriSema, Novo’s next-generation subcutaneous obesity candidate.
Another factor that has likely contributed to the steep decline in NVO’s stock price is the removal of Lilly’s tirzepatide injection products from the FDA’s drug shortage list after the regulatory body determined that LLY’s supply is currently meeting or exceeding demand and will continue to do so in the future. This shift suggests LLY can now meet the demand for obesity medications, potentially capturing a larger U.S. market share and boosting its revenues, while Novo Nordisk’s semaglutide products remain on the list, limiting its sales opportunities. Adding to the setbacks, Eli Lilly announced that Zepbound has outperformed Novo Nordisk’s Wegovy (20.2% compared with 13.7%, respectively) in a weight-loss head-to-head study.
However, Amgen, a large-cap biotech company, has taken a different approach. AMGN is evaluating its obesity drug MariTide as a single dose in a convenient autoinjector device with a monthly and maybe less frequent dosing, a key feature that differentiates it from LLY and Novo’s obesity drugs, which are weekly injections.
The obesity market has garnered much interest lately, considering its immense commercial potential. Per a research conducted by Goldman Sachs, the obesity market in the United States is expected to reach $100 billion by 2030. This is also evident from the fact that LLY and Novo have started evaluating multiple other novel obesity candidates.
Considering the immense demand for obesity drugs, Lilly and Novo are now focusing on enhancing patients' comfort and developing oral formulations of obesity drugs. Viking Therapeutics is one of the few biotechs that has shown immense potential in this space.
Last November, VKTX reported updated data from an early-stage study, which showed that patients who received its obesity drug lost up to 8.2% of their body weight after 28 days of daily dosing compared with 1.4% in the placebo group. Based on this data, Viking recently started a mid-stage study on the oral obesity drug.
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