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Popular obesity stocks fell on Tuesday after pharma giant Eli Lilly LLY lowered its sales guidance for full-year 2024 and announced disappointing preliminary fourth-quarter sales numbers.
LLY’s Revised ’24 Sales View Below Expectations
Eli Lilly anticipates fourth-quarter revenues to reach approximately $13.5 billion, bringing the full-year total to $45 billion. However, the reported full-year figure fell short of the company’s previously projected range of $45.4-$46.0 billion shared in October. The reported figures also missed the Zacks Consensus Estimate of $13.93 billion for the fourth quarter and $45.44 billion for the full year.
LLY stock fell nearly 7% after this announcement. Management attributed this lowered guidance to the slowed sales growth of its tirzepatide products in the fourth quarter — diabetes drug Mounjaro added $3.5 billion, while obesity drug Zepbound generated $1.9 billion. While sales of both drugs have been rising on a sequential and yearly basis, the reported figures missed the consensus estimate of $4.3 billion for Mounjaro and $2.2 billion for Zepbound.
This is the second straight quarter where LLY’s quarterly top-line results disappointed investors. Similar to third-quarter 2024, management stated that sales of both Mounjaro and Zepbound were hurt by lower-than-expected channel inventory of the products. Eli Lilly is scheduled to report fourth-quarter and full-year 2024 results on Feb. 6, 2025.
However, not all was bad, as LLY issued fresh sales guidance for full-year 2025 between $58 billion and $61 billion. This suggests growth of 32% at the mid-point when compared to the expected 2024 revenues. The Zacks Consensus Estimate for 2025 sales was pegged at $60.26 billion.
Why Did Other Obesity Stocks Fall?
Eli Lilly’s announcement also dragged shares of other companies developing/marketing obesity drugs, including Novo Nordisk NVO, Viking Therapeutics VKTX and Amgen AMGN. Investors were spooked as the guidance for both Mounjaro and Zepbound missed expectations and further questioned the industry’s accuracy in forecasting demand for obesity drugs.
Shares of LLY’s biggest rival Novo Nordisk were down 4% on Tuesday. NVO currently markets its obesity drug Wegovy and diabetes drug Ozempic, both of which contain the active ingredient semaglutide — a direct competitor to Lilly’s tirzepatide. Shares of Viking Therapeutics and Amgen, which are currently developing their respective obesity drugs, were down about 13% and 1%, respectively.
Shares of Novo have plunged more than 40% in the past six months. Though the current obesity market is operating like a duopoly between LLY and NVO, Zepbound continues to maintain the best-in-class title for obesity treatment. The highest dose of Zepbound has shown 25% weight loss over a similar duration in a late-stage study compared with 22.7% with CagriSema, Novo’s next-generation subcutaneous obesity candidate.