By Mackenzie Tatananni and George Glover

$Eli Lilly and Co (LLY.US)$ stock soared Thursday after the pharmaceutical giant said its new weight-loss pill had cleared a late-stage clinical trial, bringing Lilly one step closer to snapping up market share from rival $Novo-Nordisk A/S (NVO.US)$.

Lilly said in a news release that its orforglipron pill had passed a Stage 3 trial with "statistically significant efficacy results" and a safety profile consistent with injectable obesity drugs that already are on the market.

Orforglipron is a GLP-1 receptor agonist that works similarly to medications like Novo's Ozempic. The pill mimics the effects of the hormone glucagon-like peptide-1, which plays a role in regulating appetite and blood sugar levels.

Data collected during the trial showed that orforglipron was as safe to use as injectable GLP-1 medicines currently on the market. Patients on the highest dose lost an average of 16 pounds, or 7.9% of their weight, after 40 weeks.

However, it did lag behind competitors in one area. The pill helped lower hemoglobin A1c by an average of 1.3% to 1.6% from a starting level of 8% across different doses. Patients who took a placebo saw a 0.1% reduction in blood sugar levels. By comparison, hemoglobin A1c was lowered by closer to 2% in people who took Novo's Ozempic.

But it seems investors weren't concerned by the nuances, as evidenced by the stock price. Eli Lilly shares surged 16% to $852.76 on Thursday while the benchmark S&P 500 rose 0.3%. The stock was on pace for the largest daily percentage increase since June 29, 2000, when it rose nearly 18%, according to Dow Jones Market Data.

As Lilly rose, U.S.-listed shares of Novo Nordisk, the maker of Ozempic and its most formidable rival in the weight-loss market, declined 7.3%.

Orforglipron is more than just a tool for weight management, it's intended for use in diabetes patients as well. Lilly stressed that approval of the drug would advance the company's mission "to reduce chronic diseases like type 2 diabetes."

As an oral treatment, the pill differs by design from the GLP-1 injectables that currently saturate the market. In theory, orforglipron would be easier to manufacture and produce than an injectable medicine, giving Lilly an edge over competitors like Novo.

"As a convenient once-daily pill, orforglipron may provide a new option and, if approved, could be readily manufactured and launched at scale for use by people around the world," Lilly CEO David Ricks said in the release.

Orforglipron is not the first oral GLP-1 receptor agonist -- the differences are more nuanced than that. Novo's Rybelsus, a peptide-based oral semaglutide, was approved by the Food and Drug Administration back in 2019. The FDA approved a label update for Rybelsus in 2023, allowing it to be used as an initial therapy for adults with type 2 diabetes.

Beyond the differences in chemical composition, Rybelsus must be taken with food, while this is optional for people taking orforglipron.

Competition in the market is stiff, and Lilly aims to set itself apart. Its treatment portfolio spans a range of medical specialties from oncology to immunology. Following the success of Zepbound and Mounjaro, the company is particularly eager to expand its basket of weight-loss drugs.

Zepbound and Mounjaro certainly have earned their reputation as blockbuster drugs. Lilly noted that their volume growth was the driver behind a 45% increase in revenue during the most recent quarter.

If orforglipron passes every trial and ultimately secures FDA approval, Lilly is confident it will be able "to launch the drug worldwide without supply constraints," the company said.

Orforglipron is roughly halfway through its seven scheduled Phase 3 trials. Assuming all goes according to plan, Lilly said it expects to file for regulatory approval of the pill for obesity by the end of the year, and for diabetes in 2026.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com and George Glover at george.glover@dowjones.com

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