Eli Lilly’s weight-loss pill shows 94% reduction in diabetes risk: Is a $1 trillion valuation next?

Eli Lilly & Co (NYSE: LLY) has made a groundbreaking revelation that its weight-loss drug, Tirzepatide, reduces the risk of developing type 2 diabetes by an astonishing 94% in overweight adults with pre-diabetes. 

Based on long-term clinical trials, this discovery solidifies the drug’s potential as a game-changer in the fight against diabetes, a condition affecting millions globally. 

With these results, Eli Lilly’s stock surged nearly 2% on Tuesday, pushing the company closer to a historic $1 trillion valuation.

The study, which involved over 1,000 adults, revealed that those who received the highest weekly dosage of Tirzepatide for 176 weeks experienced an average weight reduction of 22.9%. 

In stark contrast, the placebo group saw only a 2.1% decrease in body weight. 

These findings underscore the drug’s effectiveness not just in weight management but also in significantly lowering the risk of diabetes for individuals already at high risk.

How effective will Eli Lilly’s Tirzepatide be?

Eli Lilly’s senior vice president of product development, Dr. Jeff Emmick, emphasized the importance of these results, stating, “The data reinforce the potential clinical benefits of long-term therapy for living with obesity and pre-diabetes.” 

As one in three Americans currently live with pre-diabetes, this drug could play a crucial role in preventing the onset of diabetes for a large portion of the population.

The success of Tirzepatide, marketed under the brand names Zepbound and Mounjaro, is reflected in Eli Lilly’s financial performance. 

In the second quarter, Zepbound alone generated $1.24 billion in revenue in the United States, contributing to the company’s robust earnings. 

Eli Lilly recently raised its full-year guidance for adjusted per-share earnings to between $16.10 and $16.60, a significant increase from the previous upper limit of $14.

CEO David Ricks attributed the company’s strong financial outlook to the overwhelming demand for its weight-loss drug. 

“We just see unbelievable demand, and we’re not even trying that hard to promote this drug. What you’re seeing is just consumer organic demand here as we’ve shipped more products, as we bring more supply online in the US,” Ricks told investors.

Eli Lilly’s Alzheimer’s drug

Beyond its weight-loss drug, Eli Lilly is also poised for growth with its recently approved Alzheimer’s drug, which analysts at BMO Capital predict could add another $7 billion to the company’s sales.

Eli Lilly’s commitment to innovation, particularly in the weight-loss and diabetes space, positions the company as a leader in the pharmaceutical industry. 

With a market cap approaching $900 billion, experts believe Lilly could soon become the first pharmaceutical company to reach a $1 trillion valuation, driven by the sustained demand for its groundbreaking treatments.

Eli Lilly is expected to present the full results of its Tirzepatide study at a medical conference in November. 

The safety profile of the drug remains consistent with previous studies, with common side effects including mild to moderate gastrointestinal issues such as diarrhea, constipation, nausea, and vomiting.

As Eli Lilly continues to break new ground in medical science, the company’s trajectory suggests it may be on the verge of a historic achievement, fueled by the success of its innovative treatments.