Can LLY's Next-Generation Obesity Pipeline Fuel Further Growth?

Eli Lilly LLY has experienced significant growth in the past few years, particularly driven by the success of its popular tirzepatide injections, Mounjaro for type II diabetes (T2D) and Zepbound for obesity. Despite being on the market for less than three years, GLP-1 medicines, Mounjaro and Zepbound, became key top-line drivers for Lilly, with demand rising rapidly.

However, to maintain its prowess in the lucrative obesity market, especially in the United States, Lilly is investing heavily in obesity and has several new molecules currently in clinical development. This includes two late-stage candidates, orforglipron, an oral GLP-1 small molecule, and retatrutide, a triple-acting incretin and some mid-stage candidates, bimagrumab, eloralintide and mazdutide.

Earlier this year, Lilly announced data from the first of the seven phase III studies on orforglipron in T2D and obesity. In the study, orforglipron lowered A1C by an average of 1.3-1.6% across doses and also reduced weight by an average of 16lb (7.9%) at the highest dose. Lilly expects to report additional results from the phase III ACHIEVE clinical program, as well as data from the phase III ATTAIN clinical program evaluating orforglipron for obesity, later this year. It plans to file regulatory applications for obesity by the end of this year and for T2D in the first half of 2026.

Competition Heating Up in the Obesity Space

Eli Lilly’s GLP-1 drugs face strong competition from Novo Nordisk’s NVO semaglutide products, Wegovy (obesity) and Ozempic (T2D). Like LLY, NVO is also evaluating several next-generation weight loss candidates. The notable ones include CagriSema, a fixed-dose combination of a long-acting amylin analogue and Wegovy, for which regulatory submission for the weight loss indication is planned in 2026. Novo Nordisk is also developing an early-stage candidate, amycretin, a unimolecular GLP-1 and amylin receptor agonist, which had outperformed Wegovy in a phase I study. NVO has also filed a regulatory application for an oral version of Wegovy.

Several other companies, like Viking Therapeutics VKTX, are also making rapid progress in the development of GLP-1-based candidates in their clinical pipeline. Viking Therapeutics’ dual GIPR/GLP-1 receptor agonist, VK2735, is being developed both as oral and subcutaneous formulations for the treatment of obesity. Recently, Viking Therapeutics initiated a late-stage program (VANQUISH), comprising two phase III studies evaluating the subcutaneous version of VK2735 in obesity and T2D patients. VKTX had also initiated a mid-stage study (VENTURE) on the oral formulation of the candidate earlier this year.

LLY’s Stock Price, Valuation and Estimates

Shares of Eli Lilly have risen 2.6% so far this year against the industry’s decline of 1.9%. The stock has outperformed the sector but underperformed the S&P 500 index during the same time frame, as seen in the chart below.

LLY Stock Price Movement

From a valuation standpoint, Lilly’s stock is expensive. Going by the price/earnings ratio, the company’s shares currently trade at 30.14 forward earnings, higher than 14.92 for the industry. However, the stock is trading below its five-year mean of 34.54.

LLY Stock Valuation

Estimates for Eli Lilly’s 2025 earnings have declined from $22.43 to $21.95 per share in the past 60 days, and estimates for 2026 earnings have declined from $31.15 to $30.91 over the same timeframe.

LLY Estimate Movement

Eli Lilly currently carries 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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