Novo Nordisk shares slump following Eli Lilly's weight-loss pill success

Investing.com -- Novo Nordisk A/S (NYSE:NVO) shares fell as much as 8% in Thursday trading after news emerged about a competitor's successful drug trial.

Eli Lilly and Company (NYSE:LLY) announced today that its ACHIEVE-1 trial for the oral GLP-1 medication, orforglipron, met its primary endpoint in type 2 diabetes patients.

The trial results showed significant A1C reduction and weight loss, which are seen as competitive to Novo's offerings.

The ACHIEVE-1 trial results revealed an average A1C reduction of 1.3-1.6% across different doses, with the highest dose leading to a 7.9% weight loss at 40 weeks. The weight loss reported is at the upper end of investor expectations and notably has not plateaued, indicating potential for further benefits.

Despite higher rates of gastrointestinal side effects compared to injectable treatments like semaglutide and tirzepatide, discontinuation rates remained below the clinical threshold of 10%.

"These orforglipron T2D Ph3 efficacy results compare favorably cross-trial to NVO’s injectable semaglutide; the caveat is that neither semaglutide trial is a perfect comp," Leerink Partners analysts wrote in a note.

Barclays (LON:BARC) analysts think that this increases the pressure on management to bring a small molecule GLP-1 into its portfolio.

"Of course, this has been an overhang on Novo shares for quite some time, so the data reported today doesn't dramatically change things, in our view.

What we consider far more important is whether we will see script growth for Wegovy after compounding rolls off in the US as CagriSema won't be launched until likely 2027 and we think scripts need to grow in that interim period to support an above-peer multiple."

The full trial data from Eli Lilly will be presented at the American Diabetes Association (ADA) meeting on June 21, which may provide further insights into the competitive landscape for diabetes and obesity treatments.