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Lilly (LLY) Outperforms Industry Year to Date: Here's Why
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Among the large drugmakers, Lilly’s (LLY - Free Report) stock is up 22.6% this year so far against 1.1% decrease of the industry.
Here we discuss the reasons.
Success With COVID-19 Therapies
A prime reason for the rise in Lilly’s shares this year is the successful development of its antibodies to treat COVID-19.
Last month, the FDA granted emergency use authorization (EUA) to a combination of its antibody drugs, bamlanivimab (700 mg) and etesevimab (1400 mg) for the treatment of mild-to-moderate COVID-19 in patients who are at high risk of progressing to severe COVID-19. Following the approval, the U.S government signed a contract with Lilly to purchase a minimum of 100,000 doses of bamlanivimab/etesevimab cocktail for $210 million.
Earlier, bamlanivimab was granted EUA by the FDA in November 2020 as a monotherapy for high-risk patients recently diagnosed with mild-to-moderate COVID-19. Bamlanivimab alone is now authorized for emergency/temporary use in numerous countries.
Earlier this month, the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) also gave a position opinion recommending approval of bamlanivimab, as a monotherapy as well as in combination with etesevimab for the treatment of confirmed COVID-19 in Europe.
Meanwhile, other studies are ongoing on bamlanivimab in other patient populations and also in combination with etesevimab. In February, Lilly announced a deal with Vir Biotech (VIR - Free Report) and Glaxo (GSK - Free Report) to expand its ongoing BLAZE-4 study to evaluate bamlanivimab (700mg) with Vir Biotech/Glaxo’s investigational COVID-19 antibody, VIR-7831 (500mg) in low-risk patients with mild-to-moderate COVID-19.
The FDA also granted EUA to Lilly and Incyte’s (INCY - Free Report) oral JAK inhibitor Olumiant for use in combination with Gilead’s remdesivir to treat hospitalized COVID-19 patients in November 2020.
Bamlanivimab was a key driver of Lilly’s sales growth in the fourth quarter, contributing $871.2 million in sales due to a key supply contract with the U.S. government. Sales should be higher in 2021 with emergency approval received for bamlanivimab/etesevimab cocktail.In fact, in 2021, Lilly expects to generate revenues in the range of $1-$2 billion from COVID-19 therapies.
Positive Pipeline Developments
The company is already having a relatively fruitful year in terms of positive pipeline and regulatory updates.
A key pipeline news this year was that Lilly’s investigational antibody, donanemab, led to significant slowing of decline in a composite measure of cognition and daily function in patients with early symptomatic Alzheimer's disease compared to placebo in a pivotal phase II study.
Meanwhile, Lilly announced positive data from late-stage studies on bamlanivimab, bamlanivimab/ etesevimab cocktail, its dual GIP and GLP-1 receptor agonist tirzepatide in type II diabetes and on baricitinib in severe alopecia areata.
Strategic Collaboration Deals
Lilly has already signed some strategic collaboration and licensing deals this year. In February, it signed a deal with Rigel Pharmaceuticals, in-licensing exclusive rights to the latter’s RIPK1 inhibitors, including R552, for all indications including autoimmune and inflammatory diseases. In January, Lilly in-licensed exclusive rights for chronic pain drug candidate, AK1780 from Japan’s Asahi Kasei Pharma and also signed a collaboration with Merus N.V. to discover up to three novel T-cell re-directing bispecific antibodies for cancer.
Conclusion
It goes without saying that Lilly has its share of challenges. Generic competition for several drugs, rising pricing pressure in the United States due to increased rebates to maintain broad commercial access and price declines in some international markets like China, Japan and Europe and disruptions from the pandemic will continue to remain top-line headwinds in 2021.
Nonetheless, Lilly still expects revenue growth in 2021 to be driven by higher demand for key products including Trulicity, Taltz, Verzenio, Jardiance, Olumiant, Cyramza, Emgality, Tyvyt, Retevmo and COVID19 therapies.
It seems the company’s strong pipeline, consistent outperformance of key drugs, cost cuts and regular strategic deals will keep the stock afloat through 2021.
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Lilly (LLY) Outperforms Industry Year to Date: Here's Why
Among the large drugmakers, Lilly’s (LLY - Free Report) stock is up 22.6% this year so far against 1.1% decrease of the industry.
Here we discuss the reasons.
Success With COVID-19 Therapies
A prime reason for the rise in Lilly’s shares this year is the successful development of its antibodies to treat COVID-19.
Last month, the FDA granted emergency use authorization (EUA) to a combination of its antibody drugs, bamlanivimab (700 mg) and etesevimab (1400 mg) for the treatment of mild-to-moderate COVID-19 in patients who are at high risk of progressing to severe COVID-19. Following the approval, the U.S government signed a contract with Lilly to purchase a minimum of 100,000 doses of bamlanivimab/etesevimab cocktail for $210 million.
Earlier, bamlanivimab was granted EUA by the FDA in November 2020 as a monotherapy for high-risk patients recently diagnosed with mild-to-moderate COVID-19. Bamlanivimab alone is now authorized for emergency/temporary use in numerous countries.
Earlier this month, the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) also gave a position opinion recommending approval of bamlanivimab, as a monotherapy as well as in combination with etesevimab for the treatment of confirmed COVID-19 in Europe.
Meanwhile, other studies are ongoing on bamlanivimab in other patient populations and also in combination with etesevimab. In February, Lilly announced a deal with Vir Biotech (VIR - Free Report) and Glaxo (GSK - Free Report) to expand its ongoing BLAZE-4 study to evaluate bamlanivimab (700mg) with Vir Biotech/Glaxo’s investigational COVID-19 antibody, VIR-7831 (500mg) in low-risk patients with mild-to-moderate COVID-19.
The FDA also granted EUA to Lilly and Incyte’s (INCY - Free Report) oral JAK inhibitor Olumiant for use in combination with Gilead’s remdesivir to treat hospitalized COVID-19 patients in November 2020.
Bamlanivimab was a key driver of Lilly’s sales growth in the fourth quarter, contributing $871.2 million in sales due to a key supply contract with the U.S. government. Sales should be higher in 2021 with emergency approval received for bamlanivimab/etesevimab cocktail.In fact, in 2021, Lilly expects to generate revenues in the range of $1-$2 billion from COVID-19 therapies.
Positive Pipeline Developments
The company is already having a relatively fruitful year in terms of positive pipeline and regulatory updates.
A key pipeline news this year was that Lilly’s investigational antibody, donanemab, led to significant slowing of decline in a composite measure of cognition and daily function in patients with early symptomatic Alzheimer's disease compared to placebo in a pivotal phase II study.
Meanwhile, Lilly announced positive data from late-stage studies on bamlanivimab, bamlanivimab/ etesevimab cocktail, its dual GIP and GLP-1 receptor agonist tirzepatide in type II diabetes and on baricitinib in severe alopecia areata.
Strategic Collaboration Deals
Lilly has already signed some strategic collaboration and licensing deals this year. In February, it signed a deal with Rigel Pharmaceuticals, in-licensing exclusive rights to the latter’s RIPK1 inhibitors, including R552, for all indications including autoimmune and inflammatory diseases. In January, Lilly in-licensed exclusive rights for chronic pain drug candidate, AK1780 from Japan’s Asahi Kasei Pharma and also signed a collaboration with Merus N.V. to discover up to three novel T-cell re-directing bispecific antibodies for cancer.
Conclusion
It goes without saying that Lilly has its share of challenges. Generic competition for several drugs, rising pricing pressure in the United States due to increased rebates to maintain broad commercial access and price declines in some international markets like China, Japan and Europe and disruptions from the pandemic will continue to remain top-line headwinds in 2021.
Nonetheless, Lilly still expects revenue growth in 2021 to be driven by higher demand for key products including Trulicity, Taltz, Verzenio, Jardiance, Olumiant, Cyramza, Emgality, Tyvyt, Retevmo and COVID19 therapies.
It seems the company’s strong pipeline, consistent outperformance of key drugs, cost cuts and regular strategic deals will keep the stock afloat through 2021.
Lilly currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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