Eli Lilly’s Latest Obesity Drug Delivers Strong Results. It Might Work Too Well.

Eli Lilly is trying to maintain its dominance in the weight-loss drug market. (Scott Olson/Getty Images)

Key Points

• Eli Lilly’s retatrutide led to an average body weight loss of nearly 30% in a trial, exceeding current weight-loss shots.
• High dropout rates due to side effects for high-dose patients, including 43.2% for nausea and 33.1% for diarrhea, raised concerns.
• The market reaction was subdued, with Lilly shares up only 0.4%, despite the significant weight loss results.

Patients on Eli Lilly’s next-generation obesity shot lost nearly 30% of their body weight on average in a trial that tracked them for a little more than a year—a result that’s far better than the most effective weight-loss shots currently on the market.

But the drug, called retatrutide, might work too well.

The new data, released Thursday, set off a heated debate. While they suggest the drug is extremely good at helping patients lose weight, they also raised new concerns about tolerability that undercut any run-up in Lilly’s stock price.

“The discontinuation rate was very high,” TD Cowen analyst Steve Scala wrote Thursday. Scala wrote that it’s now hard to predict the outcome of future trials of the drug.

The results came in a trial largely designed to test the drug’s ability to deliver relief for overweight and obese patients with knee pain. It is the first Phase 3 result for the shot—likely Lilly’s most-anticipated pipeline product and key to its effort to continue dominating the weight-loss market.

In October, Lilly advised investors “not to over extrapolate” from the trial readout; results from seven more Phase 3 trials of retatrutide will come in 2026 and 2027.

Among the concerns was an unusual one for a weight-loss drug: Does retatrutide work too well? Lilly said that some patients who dropped out of the trial had done so because they felt they were losing too much weight.

The late-stage trial tested the new shot in patients with knee pain, most of whom were severely obese. Patients in the treatment group had a 75.8% reduction in knee pain at the end of the trial, and 14.1% in the low-dose group were left with no knee pain, compared with 4.2% in the placebo group.

Investors don’t appear to have been wowed by the results. Lilly shares barely budged on Thursday morning, up just 0.4%.

The results could also spark worries for companies that make the artificial joints used in orthopedic surgeries, if patients who were formerly candidates for knee replacements can find relief instead from Lilly’s injection. But shares of the medical device companies that make artificial knees weren’t affected, either: Zimmer Biomet Holdings rose 0.4%, while Stryker was up 1.4%.

The unenthusiastic market response to the trial appears to be related to the high proportion of patients who dropped out of the study after experiencing side effects. The dropout rate was substantially higher than the dropout rate for Lilly’s current top-selling weight loss drug, Zepbound.

Lilly said that 43.2% of patients who received a high dose of retatrutide reported nausea, compared with 10.7% in the placebo group, and 33.1% reported diarrhea, compared with 13.4% in the placebo group.

Scala wrote that the rate of vomiting was roughly twice that seen an earlier Zepbound trial.

The rate of dropouts due to adverse events was 18.2% of patients in the high-dose group, compared with 4% in the placebo group. In a Phase 3 trial of Zepbound conducted years ago, the dropout rate due to adverse events in the highest-dose group was just 6.2%.

A higher dropout rate for retatrutide could be indicative of a difficult tolerability profile, and might imply a limited market for the drug once launched.

“If that were the end of the story,” Cowen’s Scala wrote, “it would mean that reatrutide is not really a viable drug at these doses.”

Other analysts cautioned about worrying too much about the large number of dropouts, writing that the rigid structure of the trial doesn’t reflect how the drug might be used in clinical practice.

“In the real world, we would expect clinicians would either down-titrate, extend the treatment interval, or switch to tirzepatide or orforglipron,” the respective chemical names for Lilly’s Zepbound and its experimental obesity pill, Cantor Fitzgerald analyst Carter Gould wrote Thursday.

Part of the issue may be that the drug was too effective for some patients enrolled in the study. Lilly said that the dropouts included “discontinuations for perceived excessive weight loss,” and that patients with a higher body-mass index, or BMI, had lower dropout rates.

While Lilly said that 84% of participants started the trial with a BMI of 35 or higher, the inclusion criteria allowed for participants with BMIs as low as 27, which is close to a healthy weight. Those patients may have felt they were losing too much weight.

“Patients were force-titrated to the highest dose, but some may not have needed to lose too much weight since the trial enrolled patients with a BMI ≥27,” Leerink Partners analyst David Risinger wrote on Thursday.

Lilly said that for patients with a BMI of 35 or higher, the dropout rate was 8.8% on the lower dose and 12.1% on the higher dose—somewhat closer to the Zepbound discontinuation rate, though still higher.

Scala, however, was skeptical that the issue was just that less obese patients were losing too much weight, citing the vomiting rates.

“Robust weight loss that few can tolerate would be a Pyrrhic victory,” he wrote.

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