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Eli Lilly (LLY) to Report Q2 Earnings: What's in the Cards?
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Eli Lilly & Company (LLY - Free Report) will report second-quarter 2023 results on Aug 8, before market open. In the last reported quarter, the company delivered a negative earnings surprise of 6.36%.
Factors to Consider
In the second quarter, higher demand and volume growth for Lilly’s key growth drugs (select products launched prior to 2022), including Trulicity, Taltz, Verzenio, Jardiance and Emgality, are likely to have provided top-line support.
While volumes are expected to have increased for most drugs, lower realized prices due to changes to estimates for rebates and discounts as well as updated 2022 NRDL price reductions in China are likely to have continued hurting sales of most drugs, mainly Taltz. Currency headwinds are also likely to have hurt the top line
The Zacks Consensus Estimate for Trulicity, Taltz, Verzenio, Jardiance and Emgality is $2.09 billion, $673 million, $908 million, $655 million and $170 million, respectively.
Our estimates for Trulicity, Taltz, Verzenio, Jardiance, and Emgality are $2.05 billion, $678.4 million, $897.1 million, $682.9 million and $171.1 million, respectively.
Newer products (products launched from 2022 onwards) like Retevmo, Jaypirca and Mounjaro (tirzepatide) are likely to have contributed to sales growth. Diabetes drug, Mounjaro, approved in May 2022, has seen an impressive initial uptake. The trend is expected to have continued in the second quarter. Our model estimates Mounjaro sales to be $741.6 million.
Lilly does not expect to record any COVID-19 antibody revenues in the second quarter or any remaining quarter of 2023 (since the FDA rescinded the authorization granted to its COVID-19 antibody bebtelovimab last November). This is expected to have hurt sales in the second quarter.
In addition, the entry of multiple generics due to the loss of exclusivity of Alimta in the United States is expected to have hurt the drug’s sales in the second quarter.
Sales of most established drugs like Forteo, Humalog and Humulin are likely to have declined in the quarter.
Higher marketing, selling and administrative expenses to support the launch of new products and indications and higher R&D expense due to higher costs for late-stage pipeline candidates are likely to have hurt operating profits in the quarter.
In January, the FDA issued a complete response letter (CRL) to Lilly’s biologics license application (BLA) seeking accelerated approval for donanemab for the treatment of early symptomatic Alzheimer's disease. The BLA was based on data from the phase II TRAILBLAZER-ALZ study, which showed that donanemab led to amyloid plaque reduction.
The FDA rejected the BLA as it believed the accelerated approval submission included data for only a limited number of patients with 12-month drug exposure. The FDA has asked Lilly to include data from at least 100 patients who received a minimum of 12 months of continued treatment with donanemab. Last month, Lilly announced positive data from the phase III TRAILBLAZER-ALZ 2 study that showed that treatment with donanemab significantly slowed cognitive and functional decline in people with early symptomatic AD. Based on this result, Eli Lilly will start filing regulatory submissions in the coming weeks for the candidate in AD indication, including a regulatory filing with the FDA.
Investors expect an update on donanemab on the second-quarter conference call.
Key Acquisitions Announced in Q2
In June, Lilly announced a definitive agreement to acquire DICE Therapeutics , which develops oral IL-17 inhibitors to treat chronic diseases in immunology. Lilly has offered to buy DICE Therapeutics for $48 per share in cash (an aggregate of approximately $2.4 billion).
At the end of June, Lilly announced a definitive agreement to acquire Sigilon Therapeutics . Lilly will acquire all the outstanding shares of Sigilon for an upfront payment of $14.92 per share in cash, aggregating to $34.6 million.
Existing shareholders will also be eligible to receive one non-tradeable contingent value right (“CVR”) per share, which will entitle the holder to receive up to $111.64 per share. This CVR, which is tied to clinical and regulatory milestones, brings the total value of the deal to up to $309.6 million. Sigilon’s most advanced pipeline candidate is SIG-002, an islet cell therapy solution, which is being developed in collaboration with Lilly as a potential treatment for type I diabetes. Management intends to submit an investigational new drug (IND) application to the FDA for SIG-002 next year to start clinical studies on the same.
The merger transactions are expected to close in the third quarter of 2023 and are approved by the boards of both companies.
Earnings Surprise History
This large drugmaker’s performance has been mixed, with the company missing earnings expectations in two of the last four quarters while beating in two. Lilly delivered a four-quarter negative earnings surprise of 5.55%, on average.
Lilly’s stock has risen 23.8% this year so far compared with an increase of 2.1% for the industry.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Lilly time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: Lilly’s Earnings ESP is -1.25% as the Zacks Consensus Estimate of $2.00 per share is higher than the Most Accurate Estimate of $1.97 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
A biotech stock that has the right combination of elements to beat on earnings this time around is Kodiak Sciences (KOD - Free Report) . It has an Earnings ESP of +14.05% and a Zacks Rank #3.
Kodiak Sciences’ stock has declined 58.1% so far this year. Kodiak Sciences topped earnings estimates in three of the last four quarters while missing in one. It has a four-quarter earnings surprise of 7.50%, on average.
Image: Bigstock
Eli Lilly (LLY) to Report Q2 Earnings: What's in the Cards?
Eli Lilly & Company (LLY - Free Report) will report second-quarter 2023 results on Aug 8, before market open. In the last reported quarter, the company delivered a negative earnings surprise of 6.36%.
Factors to Consider
In the second quarter, higher demand and volume growth for Lilly’s key growth drugs (select products launched prior to 2022), including Trulicity, Taltz, Verzenio, Jardiance and Emgality, are likely to have provided top-line support.
While volumes are expected to have increased for most drugs, lower realized prices due to changes to estimates for rebates and discounts as well as updated 2022 NRDL price reductions in China are likely to have continued hurting sales of most drugs, mainly Taltz. Currency headwinds are also likely to have hurt the top line
The Zacks Consensus Estimate for Trulicity, Taltz, Verzenio, Jardiance and Emgality is $2.09 billion, $673 million, $908 million, $655 million and $170 million, respectively.
Our estimates for Trulicity, Taltz, Verzenio, Jardiance, and Emgality are $2.05 billion, $678.4 million, $897.1 million, $682.9 million and $171.1 million, respectively.
Newer products (products launched from 2022 onwards) like Retevmo, Jaypirca and Mounjaro (tirzepatide) are likely to have contributed to sales growth. Diabetes drug, Mounjaro, approved in May 2022, has seen an impressive initial uptake. The trend is expected to have continued in the second quarter. Our model estimates Mounjaro sales to be $741.6 million.
Lilly does not expect to record any COVID-19 antibody revenues in the second quarter or any remaining quarter of 2023 (since the FDA rescinded the authorization granted to its COVID-19 antibody bebtelovimab last November). This is expected to have hurt sales in the second quarter.
In addition, the entry of multiple generics due to the loss of exclusivity of Alimta in the United States is expected to have hurt the drug’s sales in the second quarter.
Sales of most established drugs like Forteo, Humalog and Humulin are likely to have declined in the quarter.
Higher marketing, selling and administrative expenses to support the launch of new products and indications and higher R&D expense due to higher costs for late-stage pipeline candidates are likely to have hurt operating profits in the quarter.
In January, the FDA issued a complete response letter (CRL) to Lilly’s biologics license application (BLA) seeking accelerated approval for donanemab for the treatment of early symptomatic Alzheimer's disease. The BLA was based on data from the phase II TRAILBLAZER-ALZ study, which showed that donanemab led to amyloid plaque reduction.
The FDA rejected the BLA as it believed the accelerated approval submission included data for only a limited number of patients with 12-month drug exposure. The FDA has asked Lilly to include data from at least 100 patients who received a minimum of 12 months of continued treatment with donanemab. Last month, Lilly announced positive data from the phase III TRAILBLAZER-ALZ 2 study that showed that treatment with donanemab significantly slowed cognitive and functional decline in people with early symptomatic AD. Based on this result, Eli Lilly will start filing regulatory submissions in the coming weeks for the candidate in AD indication, including a regulatory filing with the FDA.
Investors expect an update on donanemab on the second-quarter conference call.
Key Acquisitions Announced in Q2
In June, Lilly announced a definitive agreement to acquire DICE Therapeutics , which develops oral IL-17 inhibitors to treat chronic diseases in immunology. Lilly has offered to buy DICE Therapeutics for $48 per share in cash (an aggregate of approximately $2.4 billion).
At the end of June, Lilly announced a definitive agreement to acquire Sigilon Therapeutics . Lilly will acquire all the outstanding shares of Sigilon for an upfront payment of $14.92 per share in cash, aggregating to $34.6 million.
Existing shareholders will also be eligible to receive one non-tradeable contingent value right (“CVR”) per share, which will entitle the holder to receive up to $111.64 per share. This CVR, which is tied to clinical and regulatory milestones, brings the total value of the deal to up to $309.6 million. Sigilon’s most advanced pipeline candidate is SIG-002, an islet cell therapy solution, which is being developed in collaboration with Lilly as a potential treatment for type I diabetes. Management intends to submit an investigational new drug (IND) application to the FDA for SIG-002 next year to start clinical studies on the same.
The merger transactions are expected to close in the third quarter of 2023 and are approved by the boards of both companies.
Earnings Surprise History
This large drugmaker’s performance has been mixed, with the company missing earnings expectations in two of the last four quarters while beating in two. Lilly delivered a four-quarter negative earnings surprise of 5.55%, on average.
Eli Lilly and Company Price and EPS Surprise
Eli Lilly and Company price-eps-surprise | Eli Lilly and Company Quote
Lilly’s stock has risen 23.8% this year so far compared with an increase of 2.1% for the industry.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Lilly time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: Lilly’s Earnings ESP is -1.25% as the Zacks Consensus Estimate of $2.00 per share is higher than the Most Accurate Estimate of $1.97 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Lilly has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here
Stock to Consider
A biotech stock that has the right combination of elements to beat on earnings this time around is Kodiak Sciences (KOD - Free Report) . It has an Earnings ESP of +14.05% and a Zacks Rank #3.
Kodiak Sciences’ stock has declined 58.1% so far this year. Kodiak Sciences topped earnings estimates in three of the last four quarters while missing in one. It has a four-quarter earnings surprise of 7.50%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.