LLY Stock Falls After FDA Reportedly Delays Obesity Drug Ruling

Eli Lilly and Company’s LLY stock declined 3.8% on Thursday after the FDA reportedly delayed its decision on LLY’s much-awaited oral GLP-1 drug called orforglipron. Reportedly, the FDA delayed its decision on orforglipron to April 10 from the prior expectation of late March.

Lilly filed a new drug application (NDA) seeking approval of orforglipron from the FDA in December. The company was earlier awarded the FDA Commissioner's National Priority Voucher (CNPV) for orforglipron. This voucher aims to cut review timelines to 1-2 months from the usual 10-12 months.

Lilly’s stock has risen 42.3% in the past year compared with the industry’s increase of 25.9%.

How Will the Reported Delay in Orforglipron Approval Hurt LLY?

Lilly and Danish drugmaker Novo Nordisk NVO presently dominate the GLP-1 obesity market, which is attracting massive investor interest. In December, the FDA approved Novo Nordisk’s oral version of the obesity drug, Wegovy(semaglutide). Wegovy pill is the first oral GLP-1 drug to be approved in the United States, ushering in a new era of obesity treatment. The pill includes the same active ingredient — semaglutide — contained in NVO’s Wegovy and Ozempic injections (for type II diabetes). Novo Nordisk launched the Wegovy pill this month. It has priced oral Wegovy at $149 per month (without insurance).

Daily oral pills are expected to be a more convenient and possibly cheaper alternative to the currently available once-weekly injectable obesity treatments like Lilly’s Zepbound and Novo Nordisk’s Wegovy. Oral pills may significantly lower treatment burden and potentially broaden patient adoption versus injections. Pills can also quickly bring new users, like those who fear regular injections, and others who have already lost weight with the injections and want to switch to convenient alternatives to maintain. Oral pills can be manufactured at scale to meet global demand, which, in turn, can make them cheaper. Goldman Sachs forecasts that daily oral GLP-1 pills may generate around $22 billion in sales by 2030, comprising about 25% of a projected global anti-obesity drug market of 95 billion by the end of the decade.

With the oral version of Wegovy, Novo Nordisk is looking to regain market share from Lilly as it expects the drug’s demand, which had softened recently, to improve.

The Wegovy pill gives NVO a first-to-market advantage and will initially bring in additional revenues and hurt Lilly’s market share. However, though NVO has the lead in the oral obesity market, analysts were expecting that Lilly may be able to close the gap fast once orforglipron is approved by the FDA in 2026. The latest delay pushes LLY a step back in the obesity pill race and gives NVO some extra time to gain market share in the obesity pill market.

Lilly is also evaluating orforglipron in late-stage studies in other disease areas like obstructive sleep apnea, osteoarthritis pain of the knee, stress, urinary incontinence and hypertension. These multiple late-stage studies on orforglipron can expand the candidate’s revenue potential beyond obesity and type II diabetes. 

Other Players in the Obesity Pill Race

NVO will soon advance its next-generation obesity candidate, amycretin, into late-stage development, both as an injection and oral pill. The phase III program on amycretin is planned to be initiated during the first quarter of 2026.

Smaller biotechs like Structure Therapeutics GPCR and Viking Therapeutics VKTX are also developing oral GLP-1 drugs for treating obesity.

Structure Therapeutics’ ACCESS study on its orally GLP-1 RA, aleniglipron, for obesity, met its primary and all key secondary endpoints. In the study, the 120 mg dose delivered an 11.3% placebo-adjusted weight loss. Higher doses drove deeper reductions, reaching 15.3% at 240 mg. Structure Therapeutics expects to initiate the late-stage program of aleniglipron in obesity around mid-2026.

Viking Therapeutics’ dual GIPR/GLP-1 receptor agonist, VK2735, is being developed both as oral and subcutaneous formulations for the treatment of obesity.  

Overall, the obesity market is huge, and we believe that multiple players can co-exist.

LLY’s Zacks Rank

Lilly has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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