Why Eli Lilly Stock Trounced the Market Today

Wednesday was a good day for American stocks generally, but it was even sunnier for Eli Lilly (LLY +3.78%). The pharmaceutical giant won regulatory approval for a product that’s bound to be very popular, and investors rewarded the company by pushing its stock nearly 4% higher on the day. That crushed the S&P 500 index’s 0.7% gain.

Not a tough pill to swallow

Before market open, Eli Lilly announced that the U.S. Food and Drug Administration (FDA) approved its Foundayo weight-loss product. What makes this groundbreaking for the company is that Foundayo is a daily pill. The pharmaceutical titan’s first approved weight-loss drug, the popular Zepbound, is delivered by injection once per week. The two also use different molecules to do their work.

Image source: Getty Images.

The freshly approved drug will start shipping starting next Monday, April 6, through the company’s proprietary LillyDirect online sales platform. Self-pay options start at $149 monthly for the lowest Foundayo dose.

“As a convenient, once-daily oral pill that delivers meaningful weight loss, this is obesity care designed for the real world,” Eli Lilly quoted its CEO, David Ricks, as saying.

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NYSE: LLY

Eli Lilly

Today’s Change

(3.78%) $34.75

Current Price

$954.52

Key Data Points

Market Cap

$869B

Day’s Range

$925.99 - $976.68

52wk Range

$623.78 - $1133.95

Volume

6.3M

Avg Vol

3.2M

Gross Margin

83.04%

Dividend Yield

0.68%

Turning loss into gain

Foundayo’s inevitably going to be compared to the Wegovy pill, the recently FDA-approved obesity product from Novo Nordisk. Would-be patients have to weigh several factors. In Foundayo’s favor, its molecule is sturdier, and the drug can be taken anytime, unlike the more delicate Wegovy pill. Yet the latter has reported higher weight-loss figures in clinical testing than the former.

Yet we should remember that Eli Lilly is massive and has vast resources to market the heck out of Foundayo. By contrast, Novo Nordisk is more limited. So I think we’ll see significant take-up of Eli Lilly’s new drug, and an accompanying lift in share price.