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Here's Why Lilly (LLY) Has Outperformed the Industry This Year
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Last earnings season was mixed for the Large Cap Pharmaceuticals industry with companies maintaining a cautious outlook. However, the industry picked up recently due to its COVID-19 vaccine development efforts. Among the large drugmakers, Lilly’s (LLY - Free Report) stock is up 30.4% this year so far compared with the 3.3% increase of the industry.
Here we discuss the reasons why.
A prime reason for the rise in Lilly’s shares this year is the rapid progress in its efforts to make 13
antibodies to treat COVID-19. Last month, the FDA granted emergency use authorization (EUA) to Lilly’s antibody drug, bamlanivimab (LY-CoV555) to treat mild-to-moderate COVID-19 illness at high risk of progressing to severe 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 (GILD - Free Report) remdesivir to treat hospitalized COVID-19 patients. Increased revenues from its COVID-19 therapies in fact, were one of the reasons why Lilly issued better-than-expected financial guidance for 2021, last week. The drug giant also raised its previously issued 2020 sales and earnings projections.
Meanwhile, other studies are ongoing on bamlanivimab in other patient populations and also in combination with Lilly’s another COVID-19 antibody candidate etesevimab.
Last week, Lilly also announced a definitive agreement to acquire Prevail Therapeutics for $22.50 per share in cash or an aggregate value of $880 million. The acquisition will add Prevail’s promising gene-therapy candidates, targeting neurodegenerative diseases, to Lilly’s portfolio.
Also, the company is having a relatively fruitful year in terms of positive pipeline and regulatory updates.
A key pipeline news this year was that Lilly’s breast cancer drug, Verzenio, significantly reduced the risk of cancer returning in a large late-stage study in patients with high risk HR+, HER2- early breast cancer. Verzenio is approved for treating advanced breast cancer and is not approved for an early-stage breast cancer indication. This study data could be a game changer in treating breast cancer. Approximately 30% of people diagnosed with HR+, HER2- early breast cancer are at risk of their cancer returning. Verzenio is the only CDK4 & 6 inhibitor to demonstrate a statistically significant reduction in the risk of cancer recurrence in early-stage breast cancer patients
This year so far, Lilly has gained approval for two key new medicines, Retevmo/selpercatinib (RET-altered lung and thyroid cancers) and Lyumjev/Ultra-rapid Lispro (type I and type II diabetes). The company has launched both the products. In line extensions of already marketed drugs, Lilly gained FDA approval for Cyramza for first-line lung cancer, Taltz, for non-radiographic axial spondyloarthritis (nr-axSpA) and Trulicity for cardiovascular indication. All these approvals for new drugs and line extensions can bring in additional revenues for the company.
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 rebates and legislated increases in Medicare Part D cost sharing and price declines in some international markets like China, Japan and Europe will 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, as well as newly launched cancer drug, 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.
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Here's Why Lilly (LLY) Has Outperformed the Industry This Year
Last earnings season was mixed for the Large Cap Pharmaceuticals industry with companies maintaining a cautious outlook. However, the industry picked up recently due to its COVID-19 vaccine development efforts. Among the large drugmakers, Lilly’s (LLY - Free Report) stock is up 30.4% this year so far compared with the 3.3% increase of the industry.
Here we discuss the reasons why.
A prime reason for the rise in Lilly’s shares this year is the rapid progress in its efforts to make 13
antibodies to treat COVID-19. Last month, the FDA granted emergency use authorization (EUA) to Lilly’s antibody drug, bamlanivimab (LY-CoV555) to treat mild-to-moderate COVID-19 illness at high risk of progressing to severe 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 (GILD - Free Report) remdesivir to treat hospitalized COVID-19 patients. Increased revenues from its COVID-19 therapies in fact, were one of the reasons why Lilly issued better-than-expected financial guidance for 2021, last week. The drug giant also raised its previously issued 2020 sales and earnings projections.
Meanwhile, other studies are ongoing on bamlanivimab in other patient populations and also in combination with Lilly’s another COVID-19 antibody candidate etesevimab.
Last week, Lilly also announced a definitive agreement to acquire Prevail Therapeutics for $22.50 per share in cash or an aggregate value of $880 million. The acquisition will add Prevail’s promising gene-therapy candidates, targeting neurodegenerative diseases, to Lilly’s portfolio.
Also, the company is having a relatively fruitful year in terms of positive pipeline and regulatory updates.
A key pipeline news this year was that Lilly’s breast cancer drug, Verzenio, significantly reduced the risk of cancer returning in a large late-stage study in patients with high risk HR+, HER2- early breast cancer. Verzenio is approved for treating advanced breast cancer and is not approved for an early-stage breast cancer indication. This study data could be a game changer in treating breast cancer. Approximately 30% of people diagnosed with HR+, HER2- early breast cancer are at risk of their cancer returning. Verzenio is the only CDK4 & 6 inhibitor to demonstrate a statistically significant reduction in the risk of cancer recurrence in early-stage breast cancer patients
This year so far, Lilly has gained approval for two key new medicines, Retevmo/selpercatinib (RET-altered lung and thyroid cancers) and Lyumjev/Ultra-rapid Lispro (type I and type II diabetes). The company has launched both the products. In line extensions of already marketed drugs, Lilly gained FDA approval for Cyramza for first-line lung cancer, Taltz, for non-radiographic axial spondyloarthritis (nr-axSpA) and Trulicity for cardiovascular indication. All these approvals for new drugs and line extensions can bring in additional revenues for the company.
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 rebates and legislated increases in Medicare Part D cost sharing and price declines in some international markets like China, Japan and Europe will 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, as well as newly launched cancer drug, 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.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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