Eli Lilly Stock Dives After Earnings Beat. Here’s Why.

Eli Lilly reported second-quarter earnings before the market open Thursday. (Scott Olson/Getty Images)

Eli Lilly stock tumbled after it released the results for an experimental weight-loss pill study and reported a beat-and-raise quarter early Thursday.

The medicine, Orforglipron, resulted in a weight reduction of on average 12.4% over 72 weeks in adults with obesity, Lilly said in a statement. Patients taking a placebo had lost 0.9% of their weight.

The stock dropped 10% to $670.68 on the news, indicating that investors had been hoping for a better outcome.

Adjusted earnings per share (EPS) came in at $6.31 on sales of $15.6 billion in the quarter, beating expectations of $5.60 a share on sales of $14.7 billion, according to FactSet.

Sales grew 38% year over year, driven by volume growth from weight-loss and diabetes drugs Zepbound and Mounjaro, Lilly said. Zepbound sales in the quarter was $3.4 billion and Mounjaro sales came in at $5.2 billion, beating estimates of $3 billion and $4.7 billion, according to FactSet estimates.

The company raised its 2025 adjusted EPS guidance to between $21.75 and $23, up from between $20.78 to $22.28 previously.

Danish Competitor Novo Nordisk has fallen behind Lilly, as the American company’s weight-loss shot Zepbound has seized a commanding majority of U.S. obesity prescriptions over Novo’s Wegovy.

On Wednesday, Novo Nordisk presented data showing Zepbound now accounts for 59% of U.S.-branded weight-loss prescriptions, while Wegovy has just 40%. Novo’s American depositary receipts are now down more than 34% since the company announced a significant guidance cut on July 29.

Lilly shares have slid, too, but not by nearly as much. The stock was down about 4% this year coming into Thursday trading, and more than 20% since late last summer, when it was hitting intraday peaks above $970.

Some of the enthusiasm has drained out of the obesity trade since some complexities surfaced last year—like the emergence of the legal knockoff weight-loss drugs made by compounding pharmacies—and began to weigh on sales estimates for Zepbound and Wegovy.

The company’s second-quarter report comes amid a worsening political environment for big pharma. Last week, President Donald Trump sent letters to Lilly CEO David Ricks and other top pharmaceutical executives, saying the companies have until late September to cut certain drug prices in the U.S., or else the administration will “deploy every tool in our arsenal to protect American families.”

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com