Feb 20 (Reuters) – Eli Lilly (LLY.N) is making a major bet on its experimental oral weight-loss drug, orforglipron, by investing nearly $550 million in pre-launch inventory, according to a filing on Wednesday. This move comes even before the company reports data from the late-stage trial of the drug, which is expected to be released by April.
The inventory investment is unusual as the drug’s launch is still over a year away. Typically, drugmakers include inventory in their financial statements to reflect how much product has been manufactured right before the drug is approved. However, Eli Lilly’s decision to begin stockpiling now is much earlier than usual. “While there have been similar moves with pre-launch inventories, especially with COVID-19 vaccines, this build-up is larger than normal, especially with the launch not expected until 2026,” said Kevin Gade, COO of Bahl & Gaynor, which holds Lilly shares.
This early inventory investment reflects Lilly’s strategy to gain an early advantage in the competitive weight-loss market, Gade added.
Eli Lilly and Danish drugmaker Novo Nordisk (NOVOb.CO) currently dominate the weight-loss treatment market with their injectable drugs. Novo is also studying the oral version of its experimental drug, amycretin, and other companies, including AstraZeneca (AZN.L), are developing oral obesity treatments.
Evercore ISI analyst Umer Raffat noted that the inventory build-up suggests Eli Lilly could generate $10 billion in sales by 2024 alone. He added that the inventory growth is expected to continue as the launch date approaches.
In a mid-stage trial, the highest dose of orforglipron led to a 14.7% weight loss after 36 weeks for people who were obese or overweight. Lilly plans to release late-stage data on the drug by April. During its post-earnings conference call earlier this month, the company also revealed that it is already expanding manufacturing capacity for the drug.
