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Shares of Indianapolis-based drugmaker Eli Lilly and Co. continued a two-day slide Thursday, falling about 7% in midday trading on news that Swiss competitor Roche announced positive results from an early-stage study on its own obesity drug.
Lilly shares, which had been rising sharply in recent months on brisk demand for its diabetes and weight-loss drugs, fell $62.35, to $843.24 each, in heavy trading Thursday morning.
That followed a drop of about 3.8% on Wednesday, after Roche announced preliminary results from a study on its experimental obesity drug CT-966.
The data showed that the Roche drug resulted in a mean weight loss of 6.1% within four weeks in obese patients without type 2 diabetes.
The Roche drug is a once-daily pill, compared to Lilly’s tirzepatide, sold under the brand names Mounjaro (for diabetes) and Zepbound (for obesity), which is a once-weekly shot.
Shares of Novo Nordisk, maker of semaglutide, another injectable drug sold under the brand names Ozempic (for diabetes) and Wegovy (for obesity) also fell, down 6.1% in midday trading Thursday to $127.13.
“Some patients are obviously going to prefer a weight loss drug in pill form, so Roche’s CT-996 poses a clear and present danger to the other two companies’ future profits,” according to market observer Motley Fool.
Roche acquired CT-966 in January from privately owned Carmot Therapeutics for $2.7 billion. In the deal, Roche also picked up CT-868, a once-daily injected drug, which is being developed in a mid-stage study as a first-in-class treatment for glycemic control as an adjunct to insulin in patients with type I diabetes.
Lilly and Novo have been riding a huge wave of demand for the diabetes and weight loss drugs, which has boosted revenue and profit. Both companies have had trouble meeting demand, and Lilly has spent tens of billions of dollars to expand its manufacturing capacity, including $9 billion to build and expand a brand-new factory in the LEAP Lebanon Innovation District in Boone County. (LEAP stands for Limitless Exploration/Advanced Pace
In April, Lilly said that “exceptionally strong demand” for Mounjaro and Zepbound helped push first quarter profit up 67%. Mounjaro overtook Trulicity, a longtime Lilly diabetes best-selling drug, to become the company’s best-selling product in the quarter, with $1.8 billion in sales.
Lilly will announce second-quarter earnings on Aug. 8.
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