Eli Lilly appears to be making as much of its popular obesity and diabetes drugs as possible, but shortages are mounting, threatening the corporate’s profits, analysts say. Tirzepatide is the energetic ingredient in each Eli Lilly’s diabetes treatment Mounjaro and its anti-obesity drug Zepbound. The Food and Drug Administration recently reported that supplies of each brands are expected to be limited within the second quarter for all but one dosage – the two.5 milligram launch dose. (To minimize unwanted effects, patients steadily increase the dose of the drug.) James Shin, an analyst at Deutsche Bank, said the IMS/IQVIA scenario data suggests that Lilly’s first-quarter sales exceeded the Wall Street consensus estimate of $8.9 billion will fall short by about $445 million. Based on that calculation, earnings can be about 13 cents lower per share, he said in a study published last Tuesday. Analysts expect Lilly to earn $2.46 per share on revenue of $8.92 billion when it releases its results on Tuesday before the market opens, in response to an LSEG survey. Shin’s estimate calls for Lilly to earn $2.43 per share, barely below the consensus, which was trending downward initially of publication. “While a miss could be in the offing for 1Q24, we do not believe a miss will result in LLY lowering its guidance for FY24,” Shin said. “The strong demand for Mounjaro and Zepbound can easily carry through into 2H24 and offset any shortfalls in 1H24.” But investors will need to know more details about how quickly Lilly can ramp up manufacturing of the drugs and what that effort will cost. In a research note Thursday, Leerink analyst David Risinger said the continuing shortages are hurting the drugs’ performance. According to IQVIA, within the week ending April 19, combined prescriptions of Mounjaro and Zepbound increased 63% 12 months over 12 months. However, the drugs saw 91% growth within the four-week period, he said. Zepbound has been available on the market since December. Looking on the Details At the identical time, the general variety of prescriptions for Trulicity, an earlier-generation drug that uses glucagon-like peptide-1 agonists, or GLP-1, can be slowing. This will hurt the general performance of Lilly’s incretin portfolio, analysts said. Wells Fargo Mohit Bansal said he expects investors to overlook any shortfalls in Trulicity as the main focus for Lilly’s future growth stays firmly on Zepbound and Mounjaro. Shin also noted that there can be some ambiguity in first-quarter trends, as among the sales within the fourth quarter were resulting from pharmacies trying to construct inventory following Zepbound’s approval. Analysts will even have an interest to see how quickly insurers add Zepbound to their list of covered drugs and the way this affects the drugs’ realized prices. “We are seeing growing adoption of Zepbound as a number of plans make coverage decisions,” UBS analyst Jo Walton wrote in an April 18 research note. Plans that cover about 45% of U.S. life still have yet to make a choice by mid-2019. April 1, said Walton, who noted that patients seem like getting access to Zepbound more quickly than they did to Wegovy during an analogous time period. According to Bansal, pricing could provide some room for upside, but supply dynamics remain key. “We do not expect a significant increase in guidance this quarter,” he said. Beyond Obesity As for Lilly’s attempts to expand the labeling of its incretin drugs to other indications, more news may not come until June. Earlier this month, the corporate released some early results from its Surmount obstructive sleep apnea study, which were very positive and contributed to the stock rally. LLY YTD Berg Eli Lilly shares for the reason that starting of the 12 months. Further details on this study are expected to be published in June. Research into whether tirzepatide has cardiovascular advantages continues to be ongoing. Further details are also expected by the tip of the second quarter. Lilly shares have risen greater than 25% for the reason that starting of the 12 months. According to LSEG, analysts remain largely positive on the stock, with a mean price goal of $826.94, representing an upside potential of about 12%. Deutsche Bank’s Shin said any weakness within the stock on earnings will likely be viewed as a “buying opportunity” as investors need to get in on the expansion story of this recent class of medication, with peak sales potential expected to top $100 billion by the 12 months End of the last decade. Outside of the diabetes and obesity space, further updates on Lilly’s Alzheimer’s treatment donanemab, one other key catalyst for the stock, can be value a glance. In March, the FDA delayed a choice on the closely watched monoclonal antibody treatment. The surprise move postponed the drug’s approval timeline. —CNBC’s Michael Bloom contributed to this report.
