As at least two competitors have made encouraging progress in treating obesity, Lilly, as the leading company in the trend of weight loss drugs, is threatened with loss of position and has evaporated more than $120 billion in market value in the past eight days. In terms of product structure, the operating income of products worth 10-30 billion yuan is 401/1288/60 million yuan respectively.
According to the financial news app Jitong, Lilly (LLY.US), as the leading company in the trend of weight loss drugs, is threatened with loss of position as at least two competitors have made encouraging progress in treating obesity, and has evaporated more than $120 billion in market value in the past eight days
On Thursday, the company's stock price fell 4.50%, hitting its lowest level since May. In the past eight trading days, Lilly's stock price has fallen 14%, its worst performance since 2020.
At the same time, another weight loss drug giant, Novo Nordisk (NVO.US), also suffered a heavy blow. Although the decline was less than that of Lilly, it still fell 2.84% on Thursday, and its market value evaporated more than $40 billion in the past eight trading days.
In the past week, Viking Therapeutics (VKTX.US) and Roche (RHHBY.US) have announced positive progress in their respective weight loss drug trials, which has triggered a sell-off of Lilly and Novo Nordisk stocks. This drop shows that as competitors gradually introduce viable competitive drugs, investors believe that Lilly and Novo Nordisk's dominant position in the weight loss drug market, which is expected to reach $130 billion by 2030, may come to an end.
Jared Holz, a healthcare expert at Mizuho, said: 'Our assumption is that this won't always be a duopoly. I expect the dramatic market reaction caused by competitive trials to eventually weaken over time.'
Viking said on Wednesday that the company is moving its weight loss injection VK2735 into later-stage trials and exploring monthly doses. The company also said that the oral version of the drug will enter into a mid-stage trial starting from the fourth quarter. Boosted by this news, Viking's stock price soared 39% at one point on Thursday, its best performance since February this year.
Naz Rahman, an analyst at Maxim Group, said in a report: 'Although we find VK2735 to be potentially the best-in-class injectable, the monthly formulations may be a key competitive advantage for Viking. It's widely known that patient (non-compliance) with weekly treatment, so reducing dosing burden to once monthly could be a very attractive proposition.'
Thomas Smith, an analyst at Leerink Partners, said: 'Overall, we expect Viking's shares to be supported by the recent news, the potential acceleration of VK2735 trials and continued dose escalation of VK2735 oral tablets which continue to demonstrate differentiated safety/tolerance and best-in-class potential amongst its peers.'
Meanwhile, Roche said it plans to accelerate its weight loss drug development after achieving encouraging results with its experimental weight loss drug last week.
Jeff Jonas, portfolio manager at Gabelli Funds, said Lilly may have 'a good two years of growth left, but I think they'll hit a wall eventually.'
Holz of Mizuho also said that the current market rotation - traders exiting outperforming large stocks - is another important driver of Lilly's stock price decline. Lilly's market value has now fallen below $800 billion, but has still risen about 41% this year. He added that if the stock price remains around this lower level, the stock may rebound after the second-quarter earnings report, which is scheduled for August 8.
Holz said: 'If everything indicates that fundamentals are really strong, then I think that the stock will come back.'