TD Cowen reiterates Buy rating on Eli Lilly stock after Phase III data

Eli Lilly (LLY) reported positive Phase III ATTAIN-2 trial results for its oral GLP-1 orforglipron in obesity and type 2 diabetes, demonstrating 9.6% weight loss and 1.8% A1C reduction, paving the way for global regulatory submissions this year. While analysts like TD Cowen and BofA Securities reiterated Buy ratings, with BofA projecting 35% revenue growth in 2025, the drug's efficacy was noted as comparable to semaglutide but below tirzepatide, and its 10.6% discontinuation rate raised some tolerability concerns. Despite these nuances, the strong clinical profile and robust analyst confidence underscore Eli Lilly's significant growth potential in the metabolic disease market.

Analysis

Eli Lilly (LLY) has solidified its position in the metabolic disease market with positive Phase III ATTAIN-2 trial results for its oral GLP-1 candidate, orforglipron. The trial demonstrated significant efficacy in patients with obesity and type 2 diabetes, achieving a 9.6% weight loss and a 1.8% A1C reduction over 72 weeks, which paves the way for global regulatory submissions this year. Analyst sentiment is strongly positive, with TD Cowen and BofA Securities reiterating Buy ratings and InvestingPro data showing 11 upward earnings revisions. BofA projects an exceptional 35% revenue growth for LLY in 2025, starkly contrasting with the 4% industry average. However, the analysis includes critical nuances: orforglipron's efficacy, while comparable to semaglutide, was noted to be inferior to Lilly's own injectable tirzepatide. Furthermore, a discontinuation rate of 10.6% was flagged by TD Cowen as "above ideal," signaling potential tolerability concerns that could impact its competitive profile as an oral treatment. Beyond its core metabolic pipeline, the company is diversifying through a clinical supply agreement with Immuneering Corp for a Phase 2 oncology trial.

Key Decisions for Investors

• Given the strong Phase III data for orforglipron and bullish analyst sentiment, including a projected 35% revenue growth for 2025, investors may view the continued momentum in the high-growth obesity market as supportive of a long position.
• It is crucial to monitor the competitive positioning of orforglipron; its efficacy is noted as below tirzepatide and its 10.6% discontinuation rate presents a potential headwind to market adoption that must be weighed against the convenience of its oral formulation.
• Investors should watch for the key upcoming catalyst of global regulatory submissions for orforglipron later this year, as successful filings are critical to validating the company's aggressive growth trajectory and supporting its premium valuation.