Eli Lilly (LLY) Stock Trades Down, Here Is Why

What Happened?

Shares of global pharmaceutical company Eli Lilly (NYSE:LLY) fell 3.1% in the afternoon session after the company halted a mid-stage clinical trial for its experimental drug, bimagrumab, which was intended to prevent muscle loss in patients taking its blockbuster obesity treatment, Zepbound. 

The study was evaluating bimagrumab in combination with Zepbound for obese or overweight adults with type 2 diabetes. Eli Lilly stated the trial was stopped for “strategic business reasons” just weeks after it had begun. The drug was designed to address a common side effect of rapid weight loss, which is the reduction of muscle mass. While the company confirmed that a separate study of bimagrumab in obese patients without diabetes would continue, the sudden termination of this key trial appeared to worry investors.

The shares closed the day at $714.34, down 3.7% from previous close.

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What Is The Market Telling Us

Eli Lilly’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 5 months ago when the stock gained 15.3% on the news that results from a Phase 3 trial showed that its experimental drug, Orforglipron, performed significantly well in helping patients manage obesity and diabetes. The stock's reaction suggested that investors were optimistic that, if approved, Lilly could scale production quickly and tap into the fast-growing diabetes and obesity markets.

Eli Lilly is down 8.1% since the beginning of the year, and at $715.20 per share, it is trading 23.3% below its 52-week high of $932.06 from October 2024. Investors who bought $1,000 worth of Eli Lilly’s shares 5 years ago would now be looking at an investment worth $4,760.

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