Here are 25 billion reasons to invest in Eli Lilly
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Eli Lily (NYSE:LLY) and its shareholders are sitting pretty right now. The company has defied the market selloff, with its stock soaring 11% year-to-date. Eli Lilly owes this performance to a combination of factors. The drugmaker specializes in diabetes medications, and this chronic disease won’t end just because we’re facing tough economic conditions. Plus, Eli Lilly has a deep pipeline with dozens of programs that could expand its lineup.
Here’s another reason Eli Lilly is doing well right now: The company recently won approval for Mounjaro, a therapy that targets type 2 diabetes (T2D). Mounjaro could be instrumental in Eli Lilly’s growth over the next decade and beyond. In fact, some analysts have made impressive predictions for the drug. Here’s a look at Mounjaro’s potential prospects and what it could mean for Eli Lilly.
Exciting Peak Sales Projections
The diabetes drug market is highly competitive. And in such an environment, it’s even harder to get new therapies approved, because they often have to prove just as effective as existing treatments (if not more) in clinical trials, rather than just being confronted with placebos in the studies. . Mounjaro passed this test with flying colors.
In a pivotal study, Eli Lilly investigated the effectiveness of Mounjaro in three separate doses and compared it to Novo Nordiskof semaglutide in a single dose (1mg). Mounjaro was found to be more effective in reducing T2D patients’ body weight and A1C levels (a measure of blood sugar) at all levels, demonstrating, at the very least, non-inferiority to dose of 1 mg semaglutide.
Mounjaro is the first dual GIP and GLP-1 receptor agonist approved by the United States Food and Drug Administration (FDA). GIP and GLP-1 receptor agonists mimic hormones in the body that help control blood sugar. Examples of GLP-1 receptor agonists include Eli Lilly’s Trulicity, which has been the drugmaker’s top-selling drug for some time.
Trulicity has been a big hit on its own. But the new jewel in Eli Lilly’s crown might just top it. Analysts say Mounjaro could peak in sales of $25 billion. To put this into perspective, note that AbbVieHumira’s immunological drug is the best-selling drug in the history of the industry. But even at its peak, Humira’s sales reached “only” $20.7 billion. It was last year.
Humira could improve this stage this year. But the drug will start facing generic competition in the US in 2023, meaning it’s unlikely to hit peak sales of $25 billion. Mounjaro will likely need to score label extensions to reach his full potential. The FDA has so far approved the drug for glycemic control in patients with T2D. Eli Lilly will also seek its approval to help induce weight loss, among other indications.
In another study, patients taking Mounjaro achieved weight loss of up to 22.5% compared to those taking a placebo, so endorsement of Mounjaro to help control obesity seems likely.
Many other reasons to invest
Investors should not rely entirely on analyst estimates. The important takeaway is this: Mounjaro represents a new class of diabetes drugs that in all likelihood will reach and surpass blockbuster status. Mounjaro helps demonstrate Eli Lilly’s ability to innovate, particularly in the diabetes market.
The company is also working on numerous other pipeline candidates. They include basal insulin-Fc (BIF), a potential once-weekly insulin option for patients with T2D that is undergoing phase 3 studies. In other therapeutic areas, Eli Lilly is targeting Alzheimer’s disease with donanemab.
The company recently submitted an application for pirtobrutinib, a potential new cancer therapy, to the FDA. Eli Lilly’s new approvals also include cancer treatment Retevmo, which first got the green light in 2020. Here’s the gist.
Over the next few years, Eli Lilly will continue to bolster its lineup with brand new endorsements that will help boost its revenue and profits for some time before hitting patent cliffs. This is one of the main reasons why this pharmaceutical action is worth buying today and keeping for a while.
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Prosper Junior Bakiny has no position in the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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