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Lilly (LLY) Inks Metabolic Disorders Therapy Development Deal

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Eli Lilly and Company (LLY - Free Report) announced that it has entered into a research collaboration and licensing agreement with a Massachusetts-based privately held company, Regor Therapeutics, for developing and commercializing novel therapies for metabolic disorders.

Per the agreement, Lilly will lead the clinical development, manufacturing and commercialization of products across the world except for China, Macau, Hong Kong and Taiwan, where Regor will be responsible for the same.

Per the terms of the agreement, Lilly will make an upfront payment of up to $50 million, which includes a partial equity investment in Regor. Regor is also eligible to receive up to $1.5 billion as potential development and commercial milestone payments, as well as tiered royalties ranging from low-single to low-double digits on net sales upon potential approval of a product.

With the above agreement, both Lilly and Regor are looking to leverage their existing compounds and technologies to maximize the treatment options available to patients suffering from metabolic disorders across the world.

Regor’s proprietary Computer Accelerated Rational Discovery platform will also help Lilly innovate and develop breakthrough therapies in obesity and diabetes – an area where LLY already has a strong foothold.

Shares of Lilly have rallied 44.6% so far this year compared with the industry’s increase of 14.6%.

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Please note that Lilly already has a strong portfolio of medicines to treat diabetes, with revenue growth being driven by higher demand for Trulicity, Taltz among others. The company also has some intriguing pipeline assets in its portfolio for diabetes as well.

Lilly has filed regulatory applications in the United States and Europe for its novel diabetes candidate, tirzepatide, a dual GIP and GLP-1 receptor agonist (GIP/GLP-1 RA), this year. The candidate has shown impressive blood sugar reductions and weight loss in type II diabetes patients in phase III studies.

However, competition for Lilly’s diabetes care products has increased with the entry of Novo Nordisk’s (NVO - Free Report) Victoza.

Novo Nordisk’s Ozempic/semaglutide poses strong competition to Lilly’s key growth driver, Trulicity. Several other competitors are entering the diabetes space, which remains a concern.

Zacks Rank & Stocks to Consider

Lilly currently carries a Zacks Rank of #3 (Hold). Some better-ranked stocks in the healthcare sector include GlaxoSmithKline plc (GSK - Free Report) and Endo International plc , both sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

GlaxoSmithKline’s earnings estimates have been revised 8.9% upward for 2021 and 5.5% upward for 2022 over the past 60 days. The stock has rallied 17.3% year to date.

GlaxoSmithKline’s earnings have surpassed estimates in two of the trailing four quarters, missed the same once and matched it once.

Endo International’s earnings estimates have been revised 24% upward for 2021 and 10.3% upward for 2022 over the past 60 days.

Endo International’s earnings have surpassed estimates in each of the trailing four quarters.


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