Lilly’s stock reached a new all-time high following an increase in its projected earnings due to the growing demand for the diabetes drug Mounjaro, which is also being considered for use in weight-loss treatment.
The company’s shares surged by 18%, driven not only by the positive Mounjaro news but also by favorable data from a competing drug.
Eli Lilly had already seen a 24% increase in its share value earlier in the year, and this recent rally positions it to potentially become the world’s most valuable healthcare firm in terms of market capitalization, surpassing UnitedHealth.
The substantial upswing in Lilly’s stock can be largely attributed to investor optimism surrounding the potential of Mounjaro as a weight-loss remedy and the company’s experimental Alzheimer’s drug, donanemab.
In the second quarter, Mounjaro’s sales experienced a remarkable 72.3% increase to $979.7 million, surpassing analyst estimates of $743 million. This surge in sales was due to patients transitioning from Lilly’s discounted drug program to commercial insurance plans, which offer higher reimbursement rates. Lilly anticipates a decision on Mounjaro’s use in treating obesity later in the year.
Doctors are already prescribing Mounjaro off-label as an obesity treatment.
Additionally, positive news emerged from Novo Nordisk, as their obesity treatment, Wegovy, displayed a 20% reduction in the risk of major cardiovascular events in a significant late-stage study. This result exceeded the 15% to 17% expectations of both investors and analysts.
The observed cardiovascular benefits could potentially broaden health insurance coverage for weight-loss treatments and expand their patient market.
Wells Fargo analyst Mohit Bansal noted that these drugs are evolving beyond simple weight-loss solutions, and their impact is becoming more profound. In response to these developments, Lilly revised its adjusted 2023 earnings forecast, raising the range to between $9.70 and $9.90 per share.
The revenue expectations were also adjusted upward by $2.2 billion on both ends, now projected between $33.4 billion and $33.9 billion. In terms of the second quarter, earnings per share came in at $2.11, surpassing the Refinitiv data estimate of $1.98. Additionally, sales reached $8.31 billion, exceeding estimates of $7.58 billion.
