Eli Lilly is giving Novo Nordisk a run for its money—so why is LLY stock still down today?

It’s been a week of wins for Eli Lilly’s weight-loss drugs. In the company’s second quarter earnings report on Thursday, it reported that sales of Mounjaro, its type-2 diabetes medication often used for weight loss, reached nearly $5.2 billion in revenue, up 68% from the same quarter last year and exceeding analyst estimates of $4.7 billion. Similarly, its weight-loss medication Zepbound reached $3.4 billion in sales, up 172% year-over-year and exceeding estimates of $3 billion.

According to Eli Lilly, the company’s market share for the class of drugs that includes Mounjaro and Zepbound increased to 57% during the quarter.

Additionally, Mounjaro demonstrated its ability to protect cardiovascular health in trial results announced July 31. And the company also on Thursday announced its oral GLP-1, orforglipron, helped patients lose an average of 27.3 pounds in a phase three clinical trial.

These successes, along with high demand for its weight-loss drugs, led Eli Lilly to increase its 2025 guidance. Still, investors are wary of the 148-year-old pharmaceutical company. Eli Lilly (NYSE: LLY) stock fell over 14% today, dropping to its lowest price in over a year.

Meanwhile, Eli Lilly’s key competitor in the weight-loss sphere, Novo Nordisk, saw its shares surge more than 7%, even after a disappointing earnings report yesterday suggested lower growth expectations as Wegovy and Ozempic face mounting competition from the cheaper Eli Lilly alternatives.

The seemingly counterintuitive investor reactions come down to Eli Lilly’s recent clinical trial testing the efficacy of its oral GLP-1, in a group of 3,127 adults who are obese or overweight and experiencing weight-related medical issues.

The drug is effective. At the highest dose, over half of patients in the trial saw at least a 10% reduction in weight and nearly 40% saw at least a 15% reduction.

However, investors were hoping for higher levels of weight loss to compete with Novo Nordisk’s medications—including an oral verson of Wegovy that is up for FDA approval later this year.

After Eli Lilly’s trial results were released, David Risinger, an analyst at Leerink Partners, downgraded Eli Lilly’s stock and changed his expectation for sales of the drug from $21.6 billion to $13.5 billion.

In the increasingly crowded and fast-changing weight-loss drug space, Eli Lilly and Novo Nordisk are slated to remain in close competition.

Eli Lilly plans to move to a second phase three trial for its oral GLP-1, while Novo Nordisk’s pill version of Wegovy also continues its path to FDA approval.