Lilly's Omvoh Demonstrates Durable Efficacy, But GLP-1 Pricing Risks Overshadow Immunology Win

What happened

Eli Lilly announced new Phase 3 data showing Omvoh (mirikizumab) maintains steroid-free remission in Crohn's disease patients for three years, with low hospitalization and surgery rates across inflammatory bowel disease. This reinforces Omvoh's unique position as the only IL-23p19 inhibitor with proven long-term efficacy in both Crohn's and ulcerative colitis, potentially bolstering its commercial trajectory. However, the DeepValue report emphasizes that Lilly's current earnings and valuation hinge critically on its incretin franchise, with Mounjaro and Zepbound comprising 56% of 2025 revenue amid structural pricing pressure and access fragility. The report rates LLY a WAIT due to high valuation multiples and reliance on volume growth offsetting lower realized prices, with near-term catalysts tied to 2026 guidance and oral GLP-1 regulatory timelines. Thus, while Omvoh's positive data enhances pipeline diversification, it does not materially shift the investment thesis centered on GLP-1 execution risks.

Implication

Omvoh's strengthened clinical profile may provide incremental revenue growth and reduce pipeline concentration risk, but its impact is limited given the dominance of GLP-1 drugs in Lilly's financials. With Mounjaro and Zepbound facing reported net price declines and payer access volatility, the stock's sensitivity to quarterly volume and margin data remains acute, as highlighted in filings. Lilly's high valuation at 45.3x P/E demands consistent performance margin resilience, which hinges on manufacturing efficiencies countering pricing headwinds—a key monitorable from upcoming reports. The investment thesis unchangedly prioritizes tracking to 2026 revenue and margin guidance, plus regulator validation for oral GLP-1 orforglipron, with Omvoh success offering minor downside protection. Therefore, maintain a WAIT stance, as Omvoh does not alter the core need for evidence that GLP-1 volume growth outruns price erosion without further access setbacks.

Thesis delta

The positive Omvoh data slightly mitigates pipeline risk by solidifying Lilly's immunology portfolio, but it does not address the primary thesis breakers of GLP-1 net pricing compression and payer access instability. The core thesis remains unchanged, emphasizing that investment merit hinges on observable progress toward 2026 financial targets and oral GLP-1 development timelines, with Omvoh's contribution being secondary.