Eli Lilly's One-Two Punch Could Knock Novo Nordisk Out of the Obesity Drug Fight

Novo Nordisk and Eli Lilly (LLY 1.96%) have been sparring for control of the booming anti-obesity drug market. Despite Novo Nordisk breaking the market open with Ozempic, Lilly made up ground and ultimately surpassed Novo Nordisk in the U.S.

The fight between these two GLP-1 stocks has now entered round two. Novo Nordisk’s Wegovy pill received approval in December, making it the first GLP-1 pill for weight loss. Now, Eli Lilly has punched back with Foundayo (orforglipron), its newly approved GLP-1 pill that will be available starting April 6.

But this is the first of a one-two punch from Eli Lilly that could cement the company atop the weight-loss drug market for the foreseeable future.

Image source: Getty Images.

The second GLP-1 pill for weight loss comes with an important first

Early demand for Novo Nordisk’s oral formulation of Wegovy suggests a pent-up appetite for anti-obesity drugs that you don’t need to self-inject. Eli Lilly is second to market with orforglipron, but there’s reason to believe it will ultimately outsell the Wegovy pill.

Most notably, orforglipron has no food or water restrictions. In contrast, patients must take the Wegovy pill on an empty stomach, avoiding food or other medications for 30 minutes; otherwise, it may not work, because stomach enzymes can break it down.

That’s quite an inconvenience, as many people are used to taking their pills when they wake up and then going about their day. Novo Nordisk’s Rybelsus, a GLP-1 pill for diabetes, has similar restrictions and hasn’t achieved anywhere near the sales that Ozempic has.

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The real knockout blow could be Eli Lilly’s next move

Semaglutide, the key drug in Ozempic and Wegovy, is a peptide. It breaks down in the stomach, which is why subcutaneous versions achieve far higher efficacy.

Eli Lilly’s biggest blockbuster yet could be retatrutide, a subcutaneous triple-hormone receptor agonist, the first of its kind. Retatrutide is still in phase 3 trials, but the readout data thus far indicate it could be steep competition. In its first phase 3 trial, patients taking the 12mg dose lost an average of 28.7% of body weight over 68 weeks.

Novo Nordisk’s next-generation subcutaneous drug, cagrilintide-semaglutide (CagriSema), achieved an average 23% reduction over 84 weeks in a recent trial. That failed to meet its primary endpoint of noninferiority compared to Lilly’s tirzepatide, the existing drug sold as Mounjaro and Zepbound. In other words, retatrutide is setting new performance milestones while CagriSema failed to outperform the old benchmark.

The problem facing Novo Nordisk is that its next potential winner is still quite far away; drug development takes years. That means Eli Lilly could be running circles around Novo Nordisk with orforglipron and retatrutide for the foreseeable future.