Six Phase III Orforglipron Trials Clear the Path to a 2026 Oral GLP-1 Launch, Mounjaro Internationals Accelerate, and the FY25 Guide Goes Up Again: Upgrading to Outperform

Rating Action: Hold to Outperform

We initiated coverage at Hold (constructive bias) in Q2 2025. The Q2 framing was that Lilly's incretin franchise was clearly the best-in-class injectable, but two questions held the rating below Outperform: (1) whether orforglipron could deliver injectable-comparable efficacy across the full Phase III package, and (2) whether the international Mounjaro ramp could carry growth as the U.S. obesity market matured and pricing normalized post-supply normalization. The Q3 print materially answers both.

On orforglipron: ATTAIN-2 (10.5% weight loss at 36 mg in obese T2D patients) is the cleanest possible read against the STEP-2 semaglutide benchmark (10.6% at 2.4 mg), and ACHIEVE-3 head-to-head superiority versus oral semaglutide on both A1c and weight is the kind of result that doesn't admit a face-saving narrative for the comparator. With six Phase IIIs positive and global submissions beginning this quarter, the launch is no longer a "will it work" question but a "how big can it scale" question.

On international: Europe constant-currency growth over 100% (81% ex-milestone), Japan +24%, China +22%, RoW +51% — with only 8 of the 55 launched markets reimbursed for obesity — tells us the willingness-to-pay engine is real and that reimbursement wins are upside, not the base case.

The rating action is not a celebration of the headline beat. The print itself was inside the range of plausible bull cases coming in. The upgrade is on the readout package: the orforglipron data plus the U.S. share gains plus the OUS self-pay pattern collectively shift the multi-year revenue trajectory upward, and they do so via independent vectors (innovation, share, geography). That's a quality-of-earnings upgrade, not a beat-and-raise upgrade.

Results vs. Consensus

The headline numbers speak plainly. Revenue $17.60B grew 54% YoY against Q3 2024's $11.44B. Reported EPS of $6.21 was up $5.14; non-GAAP EPS of $7.02 was up $5.84 against a prior-year quarter that included $3.08 of acquired IPR&D charges — even adjusting for that base effect, the underlying EPS power has roughly doubled. Performance margin expansion of more than 800 bps is the operating-leverage signature of a franchise where revenue is growing 50%+ on a fixed-ish R&D and commercial base.

Two line items deserve framing. First, the $380M one-time milestone benefit in Europe is real and was disclosed; ex-milestone, EU constant-currency growth was 81% — still extraordinary. Second, the U.S. price drag of -15% in the quarter overstates underlying pricing pressure: management quantified that excluding a favorable Q3 2024 rebate-estimate adjustment (the comparison base), U.S. price declined "high single digits" — in line with the prior trajectory and consistent with the FY guide.

Segment Performance

Cardiometabolic Health (Mounjaro & Zepbound) — the engine

This segment carried the print. Zepbound U.S. prescriptions tripled YoY, and management explicitly addressed the CVS Caremark template formulary change that exited Wegovy-Zepbound dual-listing earlier in the year: share of branded anti-obesity scripts dipped ~2 points QoQ at the disruption peak, then recovered to Q2 levels by exit, with a 71% new-prescription share at Q3 close. Mounjaro U.S. prescriptions grew over 60% YoY and added 4 points of T2D incretin share QoQ — a notable share gain in a category where Mounjaro was already the leading prescribed incretin for diabetes.

Vials — the consumer self-pay format — reached ~30% of U.S. Zepbound scripts and over 45% of new starts. Internationally, with launches in 55 countries (most recent additions: China, Brazil, Mexico, India in Q2; Q3 reflected post-stocking sequential growth), management framed the OUS business as "75% out-of-pocket and 25% type 2 diabetes" with reimbursement live in only 8 markets. The structural read is that obesity demand is willingness-to-pay-elastic at scale, and that the international ramp has years of reimbursement-uplift runway ahead of it.

Oncology (Verzenio, Jaypirca, Inluriyo) — quietly building

Verzenio remains the U.S. market leader in node-positive high-risk early breast cancer. U.S. prescriptions grew 3% YoY (a deceleration that management did not call out as concerning given the maturity of the indication) and international volume grew 14%. Importantly, positive overall survival data was reported in the high-risk early breast cancer setting during the quarter — a meaningful long-term durability data point that strengthens the standard-of-care positioning.

Jaypirca (pirtobrutinib) continues to build in CLL with the third positive Phase III readout — BRUIN CLL-313, in treatment-naïve CLL/SLL versus chemoimmunotherapy — that management described as showing the "most compelling effect size ever observed for a single BTK inhibitor in a treatment-naive CLL study compared to this comparator." Combined with BRUIN CLL-314, this is the basis for global treatment-naïve regulatory submissions.

Inluriyo (imlunestrant) was approved by the FDA in the metastatic ER+/HER2-/ESR1-mutated setting during the quarter. The strategically larger prize is EMBER-4 in early breast cancer — an 8,000-patient trial (the largest oncology trial Lilly has ever run) on track to fully enroll by early 2026.

Immunology (EBGLYSS, Omvoh, lebrikizumab)

EBGLYSS U.S. total prescriptions grew 41% sequentially in atopic dermatitis, with first-line use now >50% of new patients — meaningful evidence the asset is taking durable share rather than later-line salvage. Omvoh in ulcerative colitis reported positive 4-year long-term safety and efficacy data. Lebrikizumab is being submitted for an extended dosing label that would let maintenance dosing drop to as few as 6 doses per year — a significant convenience differentiator versus competing biologics.

Neuroscience (Kisunla)

Kisunla U.S. total prescriptions grew 50% sequentially. The European Commission marketing authorization came with the modified titration dosing label (which mitigates ARIA risk) — the same favorable label structure now approved in the U.S. and Japan. EU reimbursement discussions are active with launches anticipated this quarter and through 2026. Donanemab/Kisunla is a long-cycle asset where infrastructure, diagnosis-readiness, and physician comfort are the gating factors more than competition.

Pipeline color: retatrutide and orforglipron

Beyond orforglipron's six positive Phase IIIs, the segment has further dimensionality from retatrutide, the GIP/GLP-1/glucagon triple agonist. Up to six Phase III readouts are expected by the end of 2026 across the TRIUMPH (obesity) and TRANSCEND (T2D) programs. CSO Skovronsky framed retatrutide as positioned for the deeper-weight-loss segment of the patient population: "we expect retatrutide can deliver deeper and more rapid weight loss than existing obesity medicines even more than tirzepatide," while also noting Lilly will be cautious not to overextrapolate from TRIUMPH-4 (the knee osteoarthritis readout coming later this year) given it is the program's first Phase III. The portfolio framing is increasingly that of a market segmentation strategy: retatrutide for high-BMI/comorbid populations, orforglipron for scale/maintenance/first-line, tirzepatide as the established premium injectable.

Key Topics — Management Commentary

1. Orforglipron readiness for launch

CEO David Ricks on the regulatory pathway and launch posture:

"I think as we've said before, we're interested in getting orforglipron to as many patients around the world as fast as we can, including those in the U.S. So without commenting on specific vehicles, I think investors can expect us to be pursuing in all of the above strategy to get the medicine out more quickly. ... So yes, we'll see. It's obviously government decision about which pathway they choose and the review time itself. But we're focused on speed here and we're ready to launch. So the package will go in, in the quarter, and we hope to get approval as soon as we can after that."

Two observations. First, "all of the above" is unusually direct language — Ricks is signaling that Lilly will pursue any available accelerated-review vehicle. Second, "we're ready to launch" is a commercial-readiness statement, not a regulatory statement; combined with the "billions of doses" framing from prior public events, this strongly suggests Lilly has committed manufacturing capacity to a much larger Year-1 launch than a typical pharma launch would prepare for.

2. International Mounjaro: from initial launch to durable demand

President of Lilly International Patrik Jonsson on the OUS dynamic:

"I think we are very encouraged by what we're seeing outside of the U.S. And the business, as we shared earlier, is 75% out-of-pocket and 25% type 2 diabetes. ... it's not going to be a straight line, but there are significant opportunities outside of the U.S. also moving forward across type 2 and chronic weight management."

The 75% out-of-pocket figure across markets where reimbursement is largely absent is the most striking new data point in the quarter. It implies a willingness-to-pay layer that survives independent of payer dynamics and that scales with patient activation, not negotiation.

3. PBM/payer model evolution

Ricks on the Cigna shift from rebate-based to GPO-fee-based contracting:

"I think you're talking about the Cigna move ... I applaud this. I think it's a good move for innovators. It's a good move for patients. It's a good move for payers ... What I hope is that more valuable medicines will have that value recognized in pricing and less valuable medicines will have a harder time competing now because you can't just rebate away some number and find formulary position ahead of a better medicine."

The economic substance: Lilly's portfolio leans toward clinically differentiated assets, so a model that reduces the PBM's ability to swap based on rebate magnitude is structurally favorable. Ricks is endorsing the trend rather than describing a near-term financial impact.

4. Pricing dynamics and the orforglipron framing

CFO Lucas Montarce on Q3 pricing — specifically on whether the CVS template move pressured net price more than expected:

"when you actually unpack our Q3 performance, you see that actually, our pricing continued to perform as what we expected, right? So I think it's a good data going after the CVS move that we didn't see again, a significant price erosion, but actually was very much in line to what we said early in the year for the full year as well. ... if you take, for example, a good proxy that for me is LillyDirect we have been priced over the last maybe 6 months already at that starting point at $349 going to $499 and maintain that price ..."

This is the cleanest read on pricing from the quarter: the LillyDirect anchor price has held over six months in a competitive market, and the CVS template move did not produce the worst-case net-price compression bears had modeled.

5. Bridging consumer pricing and innovation incentives on orforglipron

Ricks on the apparent tension between affordable orforglipron and continued obesity innovation:

"our strategy is to bridge both. We think, as you're pointing out, that flatter pricing between U.S. and other developed countries is important. ... We have seen price elasticity ... and that it's, on the one hand, in our interest to offer consumers a compelling price where they can afford to self-pay. It's also in our interest to continue to build out indications for chronic disease ... we have so much evidence coming of long-term benefit, we should compete with other classes of medicines in chronic diseases or even create whole new classes."

Translation: orforglipron is priced for scale on the consumer self-pay channel, while differentiated dual/triple-agonists (tirzepatide, retatrutide) carry value-based pricing for clinical-need segments. This is a deliberate two-tier structure, not a contradiction.

Guidance

FY25 guidance was raised, again. The new ranges:

Montarce framed the raise as reflecting "strong underlying performance and the favorable impact of foreign exchange rates." FX is a tailwind in the quarter, but the magnitude of the revenue raise (over $2B at midpoint) cannot be explained by FX alone — the underlying demand picture is the larger driver, particularly the OUS Mounjaro acceleration and the EBGLYSS/Kisunla sequential ramps.

Notably, Lilly did not provide preliminary 2026 framing on this call, despite the orforglipron launch and the CVS-template-renormalization both being 2026 events. We read this as appropriate caution rather than reticence: the orforglipron launch profile depends on regulatory cadence and channel mix decisions that will shape early-year revenue contribution.

Analyst Q&A — Pressure Points

Sell-side questions on the call clustered around four themes; we summarize where management was sharp and where management chose to defer.

Terence Flynn (Morgan Stanley) opened with whether Lilly is pursuing the Commissioner's National Priority Review Voucher program for orforglipron and what the launch timeline puts/takes look like for 2026 consensus. Ricks sidestepped the specific voucher question but pointed out that orforglipron checks "3 or 4 of the boxes laid out" in the new program criteria, signaling Lilly is engaged but the decision sits with the agency. The "all of the above" comment was the substantive content here.

Chris Schott (JPMorgan) probed the international Mounjaro ramp specifically — whether the step-up reflected stocking versus durable demand. Jonsson differentiated cleanly: Q2 reflected initial-launch stocking in China/Brazil/Mexico/India; Q3 showed sequential lift on top of stocking, indicating real underlying demand. Useful framing for investors who had worried about Q2's optical strength.

Seamus Fernandez (Guggenheim) asked about competitor strategic responses given Lilly's market segmentation across retatrutide / orforglipron / tirzepatide. CSO Skovronsky's response was confident:

"when you look at where the science leads us and sort of every kind of reasonable or logical target to pursue, we have robust programs against those targets. And in nearly every case, I think we have either a best molecule or first molecule or both, actually. So I like our portfolio."

Steve Scala (TD Cowen) tried to extract whether the TRAILBLAZER-ALZ 3 interim has already been taken, given Lilly's prior public commentary. President of Lilly Neuroscience Anne White declined the bait: enrollment is complete, the trial is event-based, the listed completion is 2027 but could come earlier — with no commentary on interims as a matter of policy. CSO Skovronsky later clarified separately on a follow-up that he remains "extremely excited" about the preclinical Alzheimer's opportunity, citing TRAILBLAZER-1 and TRAILBLAZER-2 evidence that earlier-stage patients showed the largest treatment effect — an analytic case for why TRAILBLAZER-3 in preclinical patients is positioned for success but not a comment on the interim itself.

Other analysts probed orforglipron pricing strategy (Geoff Meacham, Citi; Asad Haider, Goldman Sachs; Akash Tewari, Jefferies; Umer Raffat, Evercore), the importance of the upcoming ATTAIN-MAINTAIN switch trial (Alex Hammond, Wolfe Research), and the IRA-negotiated semaglutide price (Tim Anderson, Bank of America). On the sema IRA price: management noted Medicare Part D is a small share of LLY's volume and that tirzepatide's head-to-head superiority versus sema is a strong foundation for value-based payer discussions in 2027 and beyond.

What They're NOT Saying

Three notable absences from the call:

1. No 2026 revenue or EPS framing. Despite an orforglipron launch on the docket, management did not preview directional 2026 numbers. This is the right answer pre-launch — channel mix and launch profile are real unknowns — but it leaves consensus to do the structural modeling on its own. Risk: outsized 2026 numbers anchor before management gives a corridor.

2. No specific orforglipron list or net price. Ricks framed the strategy ("compelling price for self-pay" + "value-based for chronic disease indications") but committed to no number. The LillyDirect anchor at $349-$499 for Zepbound is the implicit comparison point.

3. No update on the U.S. anti-obesity reimbursement landscape. Despite ongoing policy discussions about Medicare obesity coverage, the call avoided forecasts. Reading: management is treating any U.S. obesity reimbursement expansion as upside, not a base case.

What is conspicuously absent is any equivocation on competitive position. Skovronsky's "I like our portfolio" and Ricks's framing that competitor M&A and licensing activity is "normal" rather than threatening reads as confidence that the lead is widening, not narrowing.

Market Reaction

LLY shares had been trading constructively into the print on the back of the orforglipron Phase III drumbeat. The Q3 release was published premarket on October 30, 2025 with the call held the same morning. The market's overnight read was favorable on the print itself; sell-side morning notes focused on the magnitude of the international Mounjaro ramp and the orforglipron launch trajectory rather than the U.S. price decline (which management successfully reframed as base-effect).

The shape of trading in the days that followed reflected the high bar coming in: the print was strong but largely matched the bullish-end-of-range Street model, and the absence of formal 2026 framing left some "show me" overhang. We do not view the post-print trading action as thesis-relevant — the operating performance and pipeline progress are the durable inputs.

Street Perspective

Pre-print, the Street was already broadly constructive on LLY, with debates clustered on (1) how much of the orforglipron opportunity was already in the price, (2) whether U.S. obesity volume could continue compounding through CVS-formulary-style headwinds, and (3) the durability of the international ramp into 2026.

The bull case being made on the Street post-print emphasizes the segmentation argument: with orforglipron, retatrutide, tirzepatide, and (later) brenipatide, Lilly has assembled a portfolio that addresses different patient populations at different price points across a generational opportunity. The bear case post-print clusters on (1) the relatively modest size of the print's beat versus an elevated bar, (2) U.S. price degradation continuing into 2026 if PBM model shifts accelerate, and (3) the absence of 2026 framing creating consensus drift risk.

Our view: the bull case is strengthened by the call package; the bear case is real but addresses second-derivative concerns (price trajectory, pace of ramp) rather than first-derivative concerns (does the franchise work, does orforglipron work). The first-derivative debate is over. The second-derivative debate is what active managers should be paid to underwrite.

Model Implications

We will refresh the LLY model post this report. Directional changes we expect:

• FY25 baseline: Move to the upper end of the new $63.0–$63.5B range (we estimate ~$63.4B). Non-GAAP EPS to ~$23.50.
• FY26 revenue: Lift on three independent vectors — (a) orforglipron 2H 2026 contribution at $1.5–$3.0B depending on regulatory cadence and channel mix, (b) Mounjaro OUS reimbursement expansion in EU markets, (c) Zepbound continued share in U.S. anti-obesity. Center the FY26 case at $77–$82B revenue, with a wider-than-usual range until orforglipron launch shape is clearer.
• Performance margin: Hold the 45–46% range for FY25; expand toward 47–48% in FY26 on continued operating leverage, partially offset by orforglipron launch investment.
• Pipeline NPV adjustments: Increase the orforglipron NPV materially given the de-risked Phase III package; modest increase to retatrutide pending TRIUMPH-4 readout; small increase to Jaypirca on BRUIN CLL-313 standalone treatment-naïve readout.

Thesis Scorecard

Six of eight pillars strengthened; one is on track; one is watch-list. That distribution maps to an upgrade.

Closing Note

The Q2 thesis was that Lilly was a best-in-class injectable franchise where the next 12 months would either expand it into a foundational oral franchise or leave it as a category leader with a high but bounded ceiling. Q3 2025 is the print where the expansion case became the base case. Six positive Phase III orforglipron trials, accelerating international Mounjaro economics on consumer self-pay, durable U.S. share gains through formulary disruption, and operating leverage that converts every dollar of incremental revenue into outsized EPS — these are the inputs to a multi-year reacceleration, not a single-quarter beat. We move to Outperform.