Some pharmaceutical giants have done as well or better Eli Lilly (NYSE: LLY) in the stock market in the last one year. Besides, the drugmaker’s shares outperformed the broader market and Health Care Select Sector SPDR Fund by a wide margin.
The Indianapolis-based company’s secret wasn’t its financial results, as they were relatively mild, or even disappointing, for most of the period. So what’s driving Eli Lilly’s stock? Company’s promising drug pipeline.
The market is looking forward, and investors are increasingly bullish about Eli Lilly’s future, with the drugmaker producing several highly promising programs. And most recently, the company reported another important clinical win that could lead to a larger acceptance. Let’s look at this latest development and discuss what it means for Eli Lilly and its shareholders.
Donenumab shows encouraging results
Eli Lilly is looking to develop a therapy for Alzheimer’s disease (AD). This has been a particularly challenging area for the whole pharmaceutical industry, Many have tried – and most have failed – to create an effective treatment for this elusive disease. Eli Lilly itself has had failures in this area. The company’s potential AD therapy, donnemab, failed to win expedited approval from the US Food and Drug Administration (FDA) in January.
But that only means that donnumab will have to get conventional approval, and that requires Eli Lilly to show the FDA that the drug is effective. The drug maker has taken an important step in that direction Phase III study results for donanumab in early AD patients. During the trial, the therapy was able to slow the cognitive decline of patients with early symptomatic AD by 35% compared to a placebo.
It also reduced the risk of progressing to the next stage of the disease by 39%. note that biogenLekembi — an AD therapy that earned quick approval in January — reduced cognitive decline by 27% in a phase 3 clinical trial. Eli Lilly’s donnemab study didn’t pit it against Lekembi, so it may not be an accurate comparison. Still, this (less than perfect) comparison shines a positive light on dananemab’s regulatory prospects.
Another piece of an impressive arsenal
AD affects more than 6 million people in the US alone, and this number is projected to rise to 13 million by 2050, due to demographic changes, particularly the aging population. New therapeutic options targeting this disease are desperately needed, but there are not many. Biogen’s EduHelm, which was approved in mid-2021, was the first AD treatment since 2003 to earn the green light in the US.
Aduhelm ended up as a flop as questions remained about its efficacy. But Kemby may have been far more successful. Still, there’s enough room in this market to accommodate many wineries. Eli Lilly will soon seek approval for donanemab, which could happen by next year. Given the large and growing AD market, donanemab could become a key growth driver for Eli Lilly for years to come. But for Eli Lilly it’s only one piece of a bigger puzzle.
The company’s portfolio now also includes Monjaro, a groundbreaking diabetes therapy launched last year. The prospects of Munjaro are mouth-watering; can become medicine One of the best selling products in the history of the industry, Recently its positive results have come out treatment of obesity in diabetics, this is a sign that could add up over the next 12 months. Eli Lilly’s mirikizumab is another exciting candidate.
While the potential ulcerative colitis therapy failed to earn approval earlier this year, the FDA only cited manufacturing issues as the reason for the thumbs-down. So there’s a very good chance that mirikizumab will eventually come to market. Eli Lilly first quarter earnings Those weren’t very impressive, but the company’s rich pipeline will eventually allow it to improve its financial results.
Here’s what it means for investors
The ability to develop new treatments is critical to the long-term success of drug makers because older drugs will eventually run out of patent exclusivity and face cheaper biosimilars. Eli Lilly is showing its potential in this area. The Company’s new portfolio of drugs could deliver more than a decade of sustained revenue and earnings growth: new clinical compounds benefiting from 20 years of patent exclusivity in the US; The story is similar in other countries.
The forward-looking market is taking this into account and is bidding up Eli Lilly’s shares. This is the reason why the pharma giant has outperformed the broader market in the past one year despite relatively subdued financial results. And going forward, Eli Lilly shares are likely to continue to deliver big returns as new programs make clinical and regulatory progress, the company’s lineup broadens, and its financial results continue to improve. That’s why Eli Lilly’s stock has plenty of runway left despite its near 52-week high.
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