Eli LillyAn analyst said Thursday while updating LLY stock that Mounjaro’s potential pioneering diabetes drug is “risky and transformative.”
UBS analyst Colin Bristow now expects Monjaro to generate more than $25 billion in annual peak sales, nearly $5 billion more than his previous estimate. The Food and Drug Administration has approved Moonjaro in patients with type 2 diabetes. Now, Lilly is working toward approval for an obesity treatment.
Bristow expects the Food and Drug Administration to speed up approval of Monjaro’s obesity treatment. He says the agency is clearly comfortable with the drug. Although Mounjaro was the first in its class to gain FDA approval, it didn’t have to win an FDA expert panel and was approved on time.
“Essentially, registration/approval is ‘when’ and not ‘if’ in our opinion,” he said in a report to clients.
In the stock market today, LLY stock jumped 4.9% to 310.87.
LLY Stock: Moonjaro Rivals Come out
Moonjaro blocks two hormones involved in controlling blood sugar. In diabetic patients, the injection resulted in a weight loss of more than 20%. Bristow said more than 95% of patients at risk of developing diabetes have reached normal blood sugar levels.
Bristow’s point comes next Pfizer (PFE) revealed the results of the lower-star mid-stage test for an oral diabetes drug. On Wednesday, after the release, Pfizer shares fell 1.9%. LLY stock also fell 1.7%.
There are major differences between the drugs. Mounjaro inhibits glucagon-like peptide 1, or GLP-1, and glucose-dependent insulinotropic peptide, 0r GIP. Pfizer’s experimental danuglipron blocks only GLP-1. Danuglipron is an oral medication.
Pfizer reported dose-response decreases in HbA1c and fasting glucose over a 12-week period. Both are health markers in diabetic patients. Patients also lost nearly 12 pounds at the highest dose. Pfizer also tested danuglipron in six patients with obesity but not diabetes. They have lost nearly 16 lbs.
The majority of side effects were gastrointestinal and mild. Rates of nausea and vomiting increased with higher doses.
Evercore ISI analyst Umer Raffat says it’s intriguing that Pfizer hasn’t blessed danuglipron as the oral GLP-1 drug it plans to send to end-stage testing. The company is also working on backup. On top of that, Lilly has oral GLP-1 in testing that “looks very interesting,” he said. Ratings of Pfizer and LLY shares were not observed.
Play Lily of Biogen
Outside diabetes, Lilly’s experimental Alzheimer’s drug, dunanimab, shines amid a perilous backdrop for… Biogen (Bahrain Islamic Bank). Biogen will soon reveal key results for lecanemab, another potential Alzheimer’s treatment. Biogen first gained FDA approval, but the Centers for Medicare and Medicaid Services has largely declined to cover it.
“Although risky and inconclusive for the purchase thesis, dunanmap is the highest potential asset in late-stage Alzheimer’s disease,” said UBS’s Bristow. Lilly is “the best stunt and reward game in my upcoming Biogen lecanemb reading.”
In addition to his update, Bristow raised his target price for LLY stock to 363 from 335.
“Valuation looks ‘expensive’ now, but with five-year compound annual growth rates above and below five years from a diversified business and returns of more than $20 per share by 2026, we believe Lilly currently deserves a significant premium,” he said.
LLY stock is currently forming a flat base with a buy point at 335.43, according to MarketSmith.com.
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