After starting 2024 strong, Eli Lilly (LLY +2.37%) did not perform well in the second half of last year. Its financial results, though solid compared to similarly sized peers, were not always up to investors' high standards for the market-leading drugmaker.
However, Eli Lilly is gaining momentum, and expects significant catalysts that could send its stock price soaring in 2025. Even beyond those catalysts, Lilly remains an excellent buy-and-hold option for long-term investors.
A potentially game-changing weight loss medicine
It's no secret that Eli Lilly is one of the leaders in the market for weight management drugs. The company's dual GLP-1/GIP medicine, Zepbound (tirzepatide), generated almost $5 billion in sales last year after being approved in late 2023.
Zepbound, like its biggest competitor, Novo Nordisk's Wegovy, is administered via subcutaneous injection once a week. However, many drugmakers have been looking to develop anti-obesity medicine options that are taken orally. These could attract more patients, even with a less convenient once-daily schedule.
NYSE: LLY
Key Data Points
Enter orforglipron, a potential oral therapy that Eli Lilly is developing. This investigational medicine is undergoing phase 3 studies in weight management, and the drugmaker plans to release data from them sometime this year. If orforglipron's results rival (or beat) the performance of injectable medicines, it could send Eli Lilly's stock price soaring. And that's not just because the drug would likely become the first oral medicine for weight management approved by the U.S. Food and Drug Administration.
Longtime rival Novo Nordisk recently experienced a phase 3 trial setback with CagriSema, one of its promising weight loss candidates. Though CagriSema isn't an oral option, Lilly knocking a weight loss treatment out of the park, several months after Novo Nordisk failed to do so in the same area, would look great for Lilly's position in this fast-growing market.
Orforglipron is undergoing late-stage studies across several other indications, including sleep apnea and diabetes, so while its anti-obesity results will have the most impact, it's also worth monitoring the medicine's performance elsewhere.
Looking at the bigger picture
Should you purchase shares of Eli Lilly in anticipation of its share price jumping once it releases late-stage data for orforglipron? That would be unwise. The medicine might not quite meet the market's expectations, and it's impossible right now to predict whether it will. And long-term investors ought to look beyond such catalysts, exciting though they may be.
Sure, Eli Lilly's shares could jump this year if investors get excited about some news, but how will the company perform in the next five years or the next decade? Those are more important questions to ask.
Fortunately for those interested in Eli Lilly, the company's prospects look bright. Its revenue growth dropped 32% year over year in 2024 -- its top line landed at $45 billion -- but Lilly should start generating decent sales from some of its newer products this year.
That includes Ebglyss, a treatment for moderate to severe atopic dermatitis (eczema), and Kisunla, which targets Alzheimer's disease. According to projections, both medicines should be blockbusters at their peak. They are still far from that, but they'll help drive excellent top-line growth well into the next decade, as will much of the rest of Eli Lilly's lineup.
And orforglipron isn't the only promising candidate in the drugmaker's pipeline. The company's retatrutide is another promising potential weight loss treatment in late-stage studies. Retatrutide goes one step further than tirzepatide, in mimicking the action of three separate hormones responsible for functions such as regulating blood glucose levels, controlling satiety, and stimulating insulin secretion (tirzepatide mimics two such hormones).
Beyond weight loss, Eli Lilly has exciting candidates across other areas, from immunology and oncology to rare diseases. Its innovative potential, robust lineup that's helping drive excellent sales growth, and strong pipeline all make it an attractive stock to buy and hold long-term, regardless of what happens with orforglipron later this year.
