Shares have dropped despite Eli Lilly's second-quarter earnings, which topped estimates on strong demand for its blockbuster weight loss and diabetes drugs.

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Eli Lilly's shares experienced a steep decline following the release of clinical trial data for its upcoming oral obesity medication. The data showed patients lost about 12% of their body weight at the highest dose over a year, which is below the 15% benchmark set by a competing drug, Wigovi. Additionally, about 10% of participants on the highest dose discontinued due to side effects, mainly gastrointestinal issues, and a total of 25% stopped for any reason, raising questions about the drug's real-world effectiveness and tolerability.

Despite these concerns, Eli Lilly reported better-than-expected second quarter results and raised its full-year sales and profit forecasts, largely due to strong sales of its other GLP-1 drugs. However, the market reaction was dominated by disappointment over the new pill's data, leading to one of the company's worst single-day stock declines in decades.

Eli Lilly shares drop despite Q2 beat

Shares of Eli Lilly are now down over 14 plus percent. That is well more than where the stock opened this morning. This follows what is being seen as disappointing data for its upcoming pill to treat obesity. Let's get to Angelica Peebles for more. Angelica, this is getting pretty serious in terms of a market cap loss now. Yeah David, quite a big reaction today and that's because of the data like you talked about. So let's get into the numbers. People lost about 12% of their body weight after a little more than a year at the highest dose. Now that's below the 15% that we see with Wigovi and that was the benchmark that people were looking for. So now the debate is how much of those few percentage points really matter in the real world to real patients and doctors. On the side effects, about 10% of the people on the highest dose stopped taking the pill because of any adverse events, mostly GI issues. Now that's a bit higher than what we've seen with other GLP ones but it's not that much different. But more surprisingly, one quarter of patients at the highest dose stopped taking the drug for any reason and the question is why? Were people just not losing as much weight as they wanted? What happening? And we won't know until next month when Lilly presents the full results at a medical meeting. For now though, Lilly's shares are down double digits on these results. This morning Lilly CEO Dave Risks on Squawkbox told us that the company is actually happy with these results. The goal was to create an oral pill that was convenient and can be made at huge scale really for the mass market and had weight loss that was competitive with other single acting GLP ones and that's what we've achieved. Remember the first study in diabetes, probably the weight loss is a little higher than people expected here. Maybe it's one or two points below what Street had but it's right in thesis for us. Now Lilly also reporting earnings today and they raised their full year sales and adjusted profit forecast for the year after reporting better than expected second quarter results mostly because of sales of those GLP ones Manjaro and set bound but that positive news of course getting overshadowed this morning by that pill data guys. So do you think Angelica it's the side effects that caused people to stop taking it and isn't that element that has the street worried or is it just the 12% reduction that was underwhelming for investors? I think it's a little bit of both. I think the people I think that people are disappointed with the weight loss overall. Of course it's not as high as they wanted to see but I do think the question about the dropouts. Why are people dropping out? You had people about 10% of people at the highest dose dropping out because of side effects but then up to 25% dropping out for any reason and people want to know why. Is it because they're not losing as much weight as they wanted to? What are those reasons? And I think until we know more that's going to be a big question and of course the bigger risk is okay you get someone to start this drug but if they can't stay on it that's a big problem for them right because you need people to stay on these drugs in order to see those sales estimates that people want to see from this pill. I think at this point Angelica it's the worst day for Lilly in about a quarter century. We'll keep our eye on the price action today.

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