Eli Lilly delivered a promising update for its experimental obesity treatment over the weekend, leading LLY stock to rise Monday.
In the final-phase study, patients who took Lilly's tirzepatide for 72 weeks lost 35-52 pounds — or 16%-22.5% of their body weight — depending on the dose. Further, treatment with tirzepatide led to improvements in other cardio-metabolic factors, like lipids and blood pressure.
"We believe tirzepatide's (effectiveness) on weight loss is unmatched by other pharmacological treatments and, as further emphasized in the accompanying New England Journal of Medicine editorial, the tirzepatide data 'could have major ramification for people with obesity,' " Mizuho Securities analyst Vamil Divan said in a report.
On today's stock market, LLY stock advanced 0.6% to 303.36. Earlier, shares jumped as much as 4.4%.
LLY Stock: Massive Weight Loss
Tirzepatide already sells under the brand name Mounjaro as a treatment for type 2 diabetes. But Lilly is hoping to also launch it as a weight-loss drug, a proposition that's now prodding LLY stock. This would put it on Novo Nordisk's path. The Danish company sells semaglutide, in several formulations, for diabetes and obesity.
Lilly tested three doses of tirzepatide in weight loss. At the low dose, 89% of patients lost at least 5% of their body weight vs. 96% of patients at the middle and high doses. In comparison, 28% of placebo recipients hit the same bar. One analyst called the update "flawless."
At the highest dose, nearly 40% of patients lost at least one-quarter of their weight. Additionally, patients taking tirzepatide lost three times more fat than lean muscle.
The results pushed LLY stock closer to a buy point. Shares broke out of a flat base with an entry at 314.10 on May 27, but slipped back below that mark late last month. Now, Lilly stock is making a fresh run at a breakout, according to MarketSmith.com.
Testing Across Multiple Diseases
Lilly is also testing tirzepatide across various obesity-related conditions, including heart failure, and nonalcoholic steatohepatitis. The company also hopes tirzepatide can lower the risk of heart attacks, stroke and other cardiovascular conditions.
Mizuho's Divan expects tirzepatide to capture more than $14 billion in 2030 sales.
"Our enthusiasm on tirzepatide remains a key driver of our bullish view on Lilly shares," he said.
He has a buy rating and 356 price target on LLY stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
