The Eli Lilly logo is shown on one of the company's offices in San Diego, California, U.S., September 17, 2020. REUTERS/Mike Blake

By Sriparna Roy

(Reuters) -Eli Lilly said on Thursday it will start late-stage trials of its experimental drug next month after it helped patients lose as much as 20.1% of their weight in a mid-stage study, giving the company another upper-hand in the fast- growing obesity market.

The first wave of obesity drugs, which dominate the market, has mainly focused on the gut hormone GLP-1, but drugmakers are now looking to target other hormones or help preserve muscle mass during fat-loss with their next generation of treatments.

Lilly's experimental once-weekly, eloralintide, belongs to the class of drugs that mimic the pancreatic hormone amylin which slows digestion and suppresses hunger.

Unlike Lilly's Zepbound and Novo Nordisk's Wegovy, both GLP-1s, eloralintide activates amylin receptors in the brain and slows gastric emptying with the potential of less severe side effects. Amylin-based drugs have attracted interest from larger drugmakers including Roche, AbbVie and AstraZeneca.

LILLY IN THE 'DRIVER'S SEAT'

In the mid-stage trial, patients on the lowest 1 mg dose of eloralintide lost 9.5% or 10.2 kilograms, and 20.1% or 21.3 kgs at the highest 9 mg dose. This compares to 0.2 kg weight loss seen in patients on placebo at 48 weeks.

Jefferies analyst Lucy Codrington said the data offers the strongest evidence yet that the amylin class can deliver GLP-1-like or superior weight loss, while Kevin Gade, chief operating officer at Lilly shareholder Bahl and Gaynor, said it puts Lilly in the "driver's seat" for amylin treatments.

Analysts added that Lilly's results set a new bar for other amylin-based drugs in development.

The data also weighed on Roche's partner Zealand Pharma stock, sending it down 11% and on track for its worst day since April.

Zealand CEO Adam Steensberg told Reuters that Lilly's data provides evidence of the potential that amylin drugs hold overall to treat obesity.

"This supports and validates our belief, at Zealand Pharma, in the potential for petrelintide," he said.

Lilly plans to start late-stage trials next month, accelerating past Zealand's drug petrelintide, whose mid-stage data is expected in the first half of next year.

Codrington said that petrelintide could still show a 15%-20% weight loss, but it was challenging to compare the drugs in the absence of mid-stage data from Zealand.

Lilly's study enrolled 263 adults who were overweight with at least one obesity-related condition and without type 2 diabetes.

(Reporting by Sriparna Roy in Bengaluru; additional reporting by Bhanvi Satija in London; Editing by Shailesh Kuber)