What happened
Eli Lilly's (LLY 1.19%) shares rose by 3.3% on heavy volume at the start of Tuesday's trading session. This increase was due to positive mid-stage data for its next-generation weight loss medication retatrutide. In a phase 2 trial, non-diabetic patients receiving the therapy had a mean weight reduction of 17.5% at 24 weeks and 24.2% at the end of the 48-week treatment duration. These results suggest that retatrutide has the potential to be a best-in-class obesity treatment.
So what
Although Eli Lilly's shares started strong, they have since given back of all these early gains and then some due to concerns about the global economy. As of 10:56 a.m. ET on Tuesday, the drugmaker's stock was down by 0.1%. This trend reversal may be an opportunity for savvy investors, however.
Lilly's mid-stage obesity candidate has the potential to disrupt the pharmaceutical market for obesity, which is expected to reach $44 billion in prescription drug sales by 2030 according to a Bloomberg Intelligence report. This presents a huge commercial opportunity for Lilly's next-generation weight loss drug.
Now what
Based on this news, Lilly's stock could be a good buy. With tirzepatide, Lilly has a chance to capture a large portion of the anti-obesity drug market by the end of the decade. Retatrutide could further strengthen the company's position in obesity care, depending on its phase 3 trial results. Top-line data for the drug's late-stage program is expected to be available starting in 2025, with a possible commercial debut in 2026.
