It appeared that the streak had come to an end for a brief period. Eli Lilly ( LLY 2.00% ) The large pharmaceutical company’s stock experienced a significant increase of almost 160% from early 2023 to mid-July of the current year. Subsequently, Lilly’s stock price dropped by nearly 19% until last week.
Lilly announced impressive second-quarter earnings on August 8, causing the pharmaceutical company’s stock to surge by over 15% rapidly. This recent significant increase in Lilly’s stock price may indicate the start of a potentially substantial upward trend.
Mounjaro and Zepbound are becoming more popular.
The current positive outlook on the stock is primarily driven by strong sales performance of three products: Mounjaro, Zepbound, and Verzenio. blockbuster Verzenio, a medication for breast cancer, saw a significant increase of 44% in sales during the last quarter. However, investors showed even more enthusiasm for the outcomes of Mounjaro and Zepbound, which are used for managing diabetes and aiding in weight loss.
In the second quarter, Mounjaro experienced a sales increase of over three times compared to the previous year, reaching almost $3.1 billion. Zepbound, which received FDA approval in November 2023, achieved sales of over $1.2 billion during the same period.
Mounjaro and Zepbound are essentially the same medication, known as tirzepatide. Lilly sells Mounjaro in the United States as a therapy for type 2 diabetes (T2D) and globally for both T2D and obesity. In the U.S., the brand name Zepbound is utilized by the company for the treatment of obesity.
Lilly increased its projected revenue for the full year of 2024 by $3 billion, now expecting it to fall within the range of $45.4 billion to $46.6 billion. The company credited the better forecast mainly to the impressive results from Mounjaro and Zepbound.
However, Mounjaro and Zepbound are just getting started. According to analysts polled by FactSet, it is estimated that the two products will bring in total sales exceeding $50 billion by 2029.
Additional items are coming.
The company has a number of promising up-and-coming talents in its roster and future projects.
Last month, Kisunla was granted approval by the FDA for the treatment of early-stage Alzheimer’s disease. Analysts anticipate that the drug will bring in approximately $5 billion in peak annual sales.
Lilly has high hopes for tirzepatide in addressing conditions beyond T2D and obesity. It has submitted applications for regulatory clearance in the U.S. and EU for using the drug to treat obstructive sleep apnea in obese adults. The company recently shared promising outcomes for using the drug to treat individuals with heart failure and obesity. Additionally, Lilly is conducting a phase 2 clinical trial to explore tirzepatide’s effectiveness in managing metabolic-associated steatohepatitis (MASH).
It’s possible that Lilly may introduce additional drugs for Type 2 Diabetes (T2D) and obesity beyond Mounjaro and Zepbound. The company has two potential candidates in advanced stages of development, orforglipron and retatrutide, which aim to address both conditions.
The primary disadvantage of Lilly.
It is highly likely that sales of Mounjaro and Zepbound will keep increasing significantly. Lilly may experience significant growth due to FDA approvals and positive outcomes from late-stage clinical trials of its pipeline projects, potentially leading to a substantial rise in its stock value.
However, there are potential obstacles to consider. Competitors may increase their market share at the cost of Lilly, and there is a chance that the company’s new drugs might not perform well in clinical trials.
Nevertheless, the primary disadvantage for Lilly is considered to be its valuation. Currently, the company holds the position of being the largest pharmaceutical manufacturer globally. market cap With a market capitalization of $840 billion and a forward price-to-earnings ratio of approximately 65, Lilly’s shares reflect substantial growth expectations. Any obstacles in the company’s path could hinder stock price appreciation. However, there is a strong possibility that Lilly is poised for another significant upward trend.
