Is Eli Lilly Stock A Buy After The FDA Signs Off On Its New Weight-Loss Drug?
$Eli Lilly and Co (LLY.US)$ stock jumped in early November after the Food and Drug Administration signed off on its new weight-loss drug, a rival to $Novo-Nordisk A/S (NVO.US)$
Recently, Novo said a weekly shot of Ozempic helped stave off renal impairment and reduced the risk of death due to kidney or cardiovascular disease in patients with type 2 diabetes and chronic kidney disease. Earlier this year, Novo said patients who took Wegovy for five years had a 20% reduced risk of heart attack, stroke or other cardiovascular outcomes.
Lilly is also working on a next-generation diabetes and weight-loss drug called retatrutide.
Lilly is also working on a next-generation diabetes and weight-loss drug called retatrutide.
The company also announced its plan to buy $POINT Biopharma (PNT.US)$ for $1.4 billion. Point is working on radioligand treatments for cancer. The company ties a radioisotope to a molecule capable of finding cancer cells in the body. This allows the drug to deliver targeted radiation directly to the tumor, limiting the impact on healthy tissue.
The news lifted Point stock and shares of $Lantheus (LNTH.US)$ for $1.4 billion. Point is working on radioligand treatments for cancer. The company ties a radioisotope to a molecule capable of finding cancer cells in the body. This allows the drug to deliver targeted radiation directly to the tumor, limiting the impact on healthy tissue.
The news lifted Point stock and shares of $Biogen (BIIB.US)$ won the first full approval for a drug that modifies a hallmark of the disease. Lilly expects the FDA to make an approval decision on its experimental drug, dubbed donanemab, in the first quarter. Donanemab uses the same mechanism as Biogen and $Eisai (ADR) (ESAIY.US)$ Leqembi.
The news lifted Point stock and shares of $Lantheus (LNTH.US)$ for $1.4 billion. Point is working on radioligand treatments for cancer. The company ties a radioisotope to a molecule capable of finding cancer cells in the body. This allows the drug to deliver targeted radiation directly to the tumor, limiting the impact on healthy tissue.
The news lifted Point stock and shares of $Biogen (BIIB.US)$ won the first full approval for a drug that modifies a hallmark of the disease. Lilly expects the FDA to make an approval decision on its experimental drug, dubbed donanemab, in the first quarter. Donanemab uses the same mechanism as Biogen and $Eisai (ADR) (ESAIY.US)$ Leqembi.
So, is Eli Lilly stock a buy right now?
Eli Lilly Stock: Bullish Earnings Growth
During the third quarter, Lilly earned an adjusted 10 cents per share on $9.5 billion in sales. LLY stock analysts projected a per-share loss of 18 cents due to tax charges. Earnings tumbled 95%. Sales jumped 36%, though, and easily topped projections for $8.97 billion.
Mounjaro generated $1.41 billion, also coming in north of views for $1.28 billion, according to FactSet. Likewise, breast cancer treatment Verzenio beat expectations at $1.04 billion, growing 68%.
But other drugs faced pricing constraints in the U.S., Third Bridge analyst Lee Brown said in a report. Jardiance, a diabetes drug, brought in $700.8 million in sales, up 22%, but below projections. Analysts are watching sales of Jardiance now that it's also approved to treat patients with chronic kidney disease.
Bullish third-quarter sales lines up with savvy investing advice, which suggests investors look for companies with recent growth of at least 20% to 25%. But earnings aren't hitting that bar due to the expected tax charges.
In the fourth quarter, Eli Lilly stock analysts predict earnings of $2.80 per share, surging 34%, and for sales to grow 23% to $8.97 billion.
During the third quarter, Lilly earned an adjusted 10 cents per share on $9.5 billion in sales. LLY stock analysts projected a per-share loss of 18 cents due to tax charges. Earnings tumbled 95%. Sales jumped 36%, though, and easily topped projections for $8.97 billion.
Mounjaro generated $1.41 billion, also coming in north of views for $1.28 billion, according to FactSet. Likewise, breast cancer treatment Verzenio beat expectations at $1.04 billion, growing 68%.
But other drugs faced pricing constraints in the U.S., Third Bridge analyst Lee Brown said in a report. Jardiance, a diabetes drug, brought in $700.8 million in sales, up 22%, but below projections. Analysts are watching sales of Jardiance now that it's also approved to treat patients with chronic kidney disease.
Bullish third-quarter sales lines up with savvy investing advice, which suggests investors look for companies with recent growth of at least 20% to 25%. But earnings aren't hitting that bar due to the expected tax charges.
In the fourth quarter, Eli Lilly stock analysts predict earnings of $2.80 per share, surging 34%, and for sales to grow 23% to $8.97 billion.
Alzheimer's Treatment News Bolsters LLY Stock
Eli Lilly is angling for FDA approval of donanemab, a potential Alzheimer's treatment that removes built-up plaque in the brain known as beta amyloid. Beta amyloid is a hallmark of the disease, though experts don't necessarily agree that it's the cause.
Biogen's Leqembi gained full approval for Alzheimer's treatment based on its ability to remove amyloid. Now, analysts expect Lilly's donanemab to follow suit. In mid-July, Lilly said patients who received its drug for 18 months had a 22%-29% slower decline in cognition than placebo recipients.
The results were even stronger in patients with medium to low levels of a protein called tau in their brains. Donanemab led to a 35%-36% slower cognitive decline compared with a placebo.
Experts noted that donanemab does a better job of clearing away beta amyloid than Biogen's Leqembi. But that could lead to higher levels of a side effect called amyloid-related imaging abnormalities, or ARIA. This is generally asymptomatic swelling in the brain.
Eli Lilly is angling for FDA approval of donanemab, a potential Alzheimer's treatment that removes built-up plaque in the brain known as beta amyloid. Beta amyloid is a hallmark of the disease, though experts don't necessarily agree that it's the cause.
Biogen's Leqembi gained full approval for Alzheimer's treatment based on its ability to remove amyloid. Now, analysts expect Lilly's donanemab to follow suit. In mid-July, Lilly said patients who received its drug for 18 months had a 22%-29% slower decline in cognition than placebo recipients.
The results were even stronger in patients with medium to low levels of a protein called tau in their brains. Donanemab led to a 35%-36% slower cognitive decline compared with a placebo.
Experts noted that donanemab does a better job of clearing away beta amyloid than Biogen's Leqembi. But that could lead to higher levels of a side effect called amyloid-related imaging abnormalities, or ARIA. This is generally asymptomatic swelling in the brain.
Eli Lilly Stock Investors Watch Weight-Loss Drugs
Investors are waiting for more from Lilly's efforts in obesity treatment. The FDA has signed off on its tirzepatide in patients with type 2 diabetes and as a weight-loss drug. Tirzepatide mimics two gut hormones, GLP-1 and GIP.
Its next-generation approach called retatrutide adds in a third called the glucagon receptor. In theory, this could lead to improved weight loss. Over 24 weeks, overweight patients or those with obesity who received retatrutide lost up to 17.5% of their weight. At 48 weeks, patients lost up to 24.2% of their body weight.
Mounjaro had already set a high bar. In June, Lilly said patients lost up to 15% of their body weight over 72 weeks. Lilly tested the drug in patients with type 2 diabetes and obesity. In patients without diabetes, the drug generated even stronger weight loss, up to 22.5% of their body weight.
Lilly is also testing Mounjaro's ability to improve morbidity and mortality in patients with obesity or those who are overweight. The results of that study are expected in late 2027.
In August, Novo Nordisk said its obesity drug Wegovy cut the risk of cardiovascular events — like heart attack or stroke — in a five-year study. This could help make the case for insurance coverage of weight-loss drugs for patients who have or are at risk of cardiovascular disease.
The pharmaceutical company just acquired Versanis Bio, which has a drug that could improve fat loss while limiting muscle mass loss associated with GLP-1 drugs.
Investors are waiting for more from Lilly's efforts in obesity treatment. The FDA has signed off on its tirzepatide in patients with type 2 diabetes and as a weight-loss drug. Tirzepatide mimics two gut hormones, GLP-1 and GIP.
Its next-generation approach called retatrutide adds in a third called the glucagon receptor. In theory, this could lead to improved weight loss. Over 24 weeks, overweight patients or those with obesity who received retatrutide lost up to 17.5% of their weight. At 48 weeks, patients lost up to 24.2% of their body weight.
Mounjaro had already set a high bar. In June, Lilly said patients lost up to 15% of their body weight over 72 weeks. Lilly tested the drug in patients with type 2 diabetes and obesity. In patients without diabetes, the drug generated even stronger weight loss, up to 22.5% of their body weight.
Lilly is also testing Mounjaro's ability to improve morbidity and mortality in patients with obesity or those who are overweight. The results of that study are expected in late 2027.
In August, Novo Nordisk said its obesity drug Wegovy cut the risk of cardiovascular events — like heart attack or stroke — in a five-year study. This could help make the case for insurance coverage of weight-loss drugs for patients who have or are at risk of cardiovascular disease.
The pharmaceutical company just acquired Versanis Bio, which has a drug that could improve fat loss while limiting muscle mass loss associated with GLP-1 drugs.
But Eli Lilly stock isn't a buy right now. According to technical analysis, shares surged through a buy zone out of a flat base. Shares are above a profit-taking zone and unlikely to fall back into the chase zone. They also aren't forming a new chart pattern.
Lilly just reported strong sales and earnings growth, in line with savvy investing advice and well above LLY stock analyst forecasts.
It will be key to watch how the markets for weight-loss drugs and Alzheimer's treatments unfold.
Lilly just reported strong sales and earnings growth, in line with savvy investing advice and well above LLY stock analyst forecasts.
It will be key to watch how the markets for weight-loss drugs and Alzheimer's treatments unfold.
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