In the eyes of Wall Street, Eli Lilly (LLY +0.87%) continues to cement its lead over the competition in the field of weight-loss and diabetes drugs. After revealing a pair of positive developments coinciding with the American Diabetes Association's annual Scientific Sessions meeting this month, RBC analyst Trung Huynh declared the drugmaker the "clear winner" of the event.
Yet while a glance at that statement may suggest that Eli Lilly competitors, most notably Novo Nordisk (NVO +1.30%), were clear "losers" at the event, you may want to check first with Martin Holst Lange, Novo's chief science officer.
Lange's remarks at the conference suggest that while Eli Lilly may have won the latest battles, the GLP-1 wars are far from finished. Let's take a closer look at the implications for both of these GLP-1 stocks.
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The ADA conference, the "clear winner," and the defiant competitor
Considering the trial data unveiled during the recent conference, the RBC analyst did not make his bold remarks regarding Eli Lilly's purported victory at the ADA conference lightly.
NYSE: LLY
Key Data Points
The pharmaceutical company not only unveiled how its latest weight-loss and diabetes management drug under development, retatrutide (triple G), showed meaningful improvements among trial participants afflicted with knee osteoarthritis pain and sleep apnea in the latest clinical trials, Eli Lilly also unveiled promising news about Foundayo, its weight-loss pill.
As seen in Lilly's recent Attain-1 and Attain-2 Phase 3 clinical trials, usage of this treatment was associated with "significant weight loss" in women at every stage of menopause.
It's not as if Eli Lilly was the only drugmaker to unveil promising data at the ADA event, which this year was held in New Orleans. Major pharmaceutical companies including Pfizer and Roche also touted their latest promising data on their respective weight-loss treatments. Not only that, but Novo Nordisk revealed some promising developments of its own.
According to Fierce Pharma, Huynh also said that the conference “modestly strengthens RBC’s positive view on Lilly and leaves the team incrementally more cautious on Pfizer. ... The field is getting more crowded -- but Lilly is widening its lead.”
NYSE: NVO
Key Data Points
Why Novo Nordisk shares continue to languish
Now, while Huynh may have declared Eli Lilly the "winner" of this year's ADA conference, it's not as if the analyst declared Novo Nordisk "the loser." In fact, Huynh noted in his research note several key positives the company highlighted about its latest weight-loss/diabetes drug candidate, CagriSema, including its "competitive type 2 diabetes profile."
At the event, Novo Nordisk also announced that U.S. prescriptions for the pill-based version of Wegovy just hit 3 million. More importantly, Novo's chief science officer, Martin Holst Lange, reportedly argued that factors such as tolerability and effectiveness against comorbidities will also play an important role in demand for specific drugs.
In an interview with Fierce Pharma, Lange also discussed that while retatrutide may have led to greater weight loss than CagriSema in recent studies, given plans for further late-stage CagriSema trials, the "jury is still out." Yet while Lange's remarks suggest Novo Nordisk could be a comeback kid among pharmaceutical stocks, investors may wait until sales growth data begins to back up these claims.
For now, Eli Lilly could continue to experience elevated growth, such as the 56% revenue growth reported last quarter, with the launch of new weight-loss and diabetes drugs helping to sustain the high growth driven by Zepbound's and Mounjaro's "out of the gate success." Meanwhile, Novo Nordisk, despite recent success with its Wegovy pill, reported negative adjusted sales growth last quarter, with full-year guidance calling for further declines . Unless the company swings back to positive growth and/or Eli Lilly's growth starts to slow down, Novo Nordisk stock will likely continue to languish, with the massive valuation gap -- 13.6 times forward earnings (Novo Nordisk) versus 30 times forward (Eli Lilly) -- between Novo Nordisk and Eli Lilly persisting as well .
