Eli Lilly and Company ( LLY ) shares are trading lower after the company ended a mid-stage study of its experimental drug bimagrumab in obesity patients with type 2 diabetes, just weeks after it began. The termination is a setback for Lilly’s obesity pipeline among growing investor expectations.

What Happened: Lilly cited strategic business reasons for halting the Phase 2b trial less than a month after launch. The discontinued study planned to enroll 180 overweight patients with type 2 diabetes over 13 months, with results originally expected by October 2026. The primary focus was weight loss — the key secondary measure tracked fat versus muscle loss.

The termination is quite noteworthy given Lilly’s significant investment in bimagrumab, paying about $2 billion in 2023 to acquire Versanis Bio. The drug is designed to preserve muscle while promoting fat loss by blocking a receptor that regulates muscle growth.

In June, Lilly reported encouraging proof-of-concept data showing bimagrumab helped patients maintain muscle mass while losing weight on Wegovy.

However, safety concerns may have influenced the decision. Bimagrumab was originally developed by Novartis AG ( NVS ) and tested almost a decade ago in a small diabetes trial that showed promise but raised questions about safety after a participant needed hospitalization from developing pancreatitis. Other studies indicate diabetes patients could be at increased risk for pancreatic inflammation.

A separate Phase 2 study of bimagrumab in non-diabetic obesity patients remains active, expected to enroll 240 participants over 70 weeks.

Despite the setback, Lilly received positive news as the FDA approved Inluriyo for treating ESR1-mutated metastatic breast cancer on Thursday. Lilly said its oral estrogen receptor antagonist reduced the risk of progression or death by 38% in a Phase 3 trial.

LLY Price Action: Eli Lilly ( LLY ) shares were down 3.71% at $714.34 at last check on Thursday, according to Benzinga Pro.

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