Lilly Boosts Outlook as Weight-Loss Fervor Propels Growth

Eli Lilly & Co.’s shares shot up as sales of its promising weight-loss treatment blew past expectations and a new study raised the prospect that its drug could benefit heart disease as well.

(Bloomberg) — Eli Lilly & Co.’s shares shot up as sales of its promising weight-loss treatment blew past expectations and a new study raised the prospect that its drug could benefit heart disease as well. 

Sales of Lilly’s diabetes drug Mounjaro, widely expected to be approved for weight loss soon, hit nearly $1 billion in the second quarter. The already high hopes for these drugs got even higher early Tuesday when Novo Nordisk A/S reported its obesity treatment Wegovy reduced the risk of heart attacks and strokes by 20% in a study, a result that exceeded expectations and is seen as a proxy for what Lilly’s drug could do.  

“We think this positive data could increase uptake and reimbursement for obesity drugs,” Cantor Fitzgerald analyst Louise Chen, who covers Lilly, wrote in a research note.

Lilly is also conducting a similar study to see if Mounjaro improves people’s cardiovascular health, but its results aren’t expected for years. These types of findings are meaningful because people with obesity tend to also be at risk for heart disease, which is the leading cause of death in the US.

The company’s shares were up as much as 18% after the market opened in New York, the most in more than three years. Lilly’s stock price has risen by 75% over the past year.

Novo’s cardiovascular data is likely to have a positive effect on the use and potential for insurance coverage for Lilly’s drug, according to analysts. Health insurers haven’t been quick to pay for obesity drugs, in part because of their high prices, but any evidence that the drugs provide other health benefits could change that calculus. 

Demand and Supply

Mounjaro’s quarterly sales came in some 30% higher than what analysts had been expecting. “The Mounjaro beat shows the strength of the franchise,” Evan David Seigerman, an analyst at BMO Capital Markets, said.  

Mounjaro has been shown to help patients lose even more weight than Novo’s Wegovy, causing demand to surge before Lilly’s drug is even formally approved as an obesity treatment. In July, a database maintained by the US Food and Drug Administration showed all of the higher doses of Mounjaro — the doses typically used for weight loss — as being in short supply. Lilly continues to expect intermittent delays fulfilling orders of certain doses and those delays may continue to impact volume, the drugmaker said in its earnings release Tuesday.

Analysts have been closely watching for updates on how the company plans to ramp up production and meet supply expectations when the drug is formally approved for use in obesity. The company has said its goal is to double capacity by the end of the year and that it is investing to create long-term supply across its entire portfolio of drugs for diabetes and weight loss.

“We don’t have a supply problem per se,” CEO Dave Ricks said in an interview early Tuesday. “We have a demand challenge, which is a good challenge.”

Still Growing

The Indianapolis-based drugmaker raised its 2023 outlook on strength from Mounjaro and other top drugs.

Sales of Lilly’s biggest drug, Trulicity, were $1.81 billion, missing analysts’ expectations for $2.05 billion. Of the company’s top five drugs, the diabetes treatment was the only one that fell short of expectations. Lilly cited higher price discounting among the reasons for the decline.

Lilly increased its adjusted earnings guidance for the year to a range of $9.70 per share to $9.90 a share, up substantially from the $8.65 to $8.85 a share it had forecast in April. Sales for the year will be $33.4 billion to $33.9 billion, Lilly said, compared with its prior outlook of $31.2 billion to $31.7 billion.

Overall, Lilly’s revenue in the second quarter was $8.3 billion, beating the average estimate of $7.58 billion. Second-quarter earnings excluding some items were $2.11 a share.

(Updates with new information throughout)

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