“Winners keep winning.” Whatever one thinks of this adage, it certainly seems to apply to Eli Lilly (NYSE: LLY). The pharmaceutical giant has been on a tear, racking up important clinical and regulatory victories in the past few years. The result: Eli Lilly has soundly crushed the market in the past five years, and the company is at it again. A recent regulatory win further improved Eli Lilly’s prospects. Let’s take a closer look.
Eli Lilly succeeds where many others failed
Over the past two decades, few therapeutic areas in the pharmaceutical industry have been harder to crack than Alzheimer’s disease (AD). Though drugmakers have poured millions into developing novel AD therapies, their efforts have mostly resulted in failures. Even Aduhelm, an AD medicine that became the first to earn the green light in the U.S. in 18 years in 2021, ended up being a monumental flop because physicians refused to prescribe it due to poor efficacy data.
This background helps highlight how important Eli Lilly’s most recent brand-new approval is. The company earned the thumbs-up from the U.S. Food and Drug Administration (FDA) for Kisunla, now indicated to treat early symptomatic AD. Kisunla didn’t have an easy path to approval. But unlike with Aduhelm, a panel of experts convened to discuss the new AD medicine unanimously voted in favor of approval.
How much will Kisunla contribute to Eli Lilly’s revenue? Sales estimates vary wildly, but they all project that Kisunla will exceed the coveted $1 billion annual sales mark. Some go as high as $8 billion in peak sales, while others are as low as about $3 billion. Wherever Kisunla lands on this range, the medicine looks destined to contribute meaningfully to Eli Lilly’s revenue growth.
Eli Lilly is a table-pounding buy
Kisunla is just one more addition to a growing portfolio of potential blockbuster medicines. Eli Lilly’s recent approvals also include cancer drug Jaypirca and Omvoh, a treatment for ulcerative colitis, both of which earned their first regulatory nods in the U.S. last year. Then there is tirzepatide, a GLP-1 medicine marketed as either Zepbound or Mounjaro in targeting obesity or diabetes, respectively. Eli Lilly’s lineup also features older medications still performing well, from cancer therapy Verzenio to Taltz, a medicine for plaque psoriasis.
Eli Lilly’s financial results are already exceptionally strong. In the first quarter, the company’s revenue was $8.8 billion, a 26% year-over-year increase — fantastic performance for a pharmaceutical giant. On the bottom line, Eli Lilly’s adjusted earnings per share of $2.58 was up by 59% compared to the year-ago period. Most of the company’s newer medicines — save for Mounjaro and Zepbound — still aren’t making massive contributions to its revenue.
Moreover, Eli Lilly has key pipeline candidates that will further improve its portfolio. That includes late-stage assets such as efsitora alfa, a novel, once-weekly insulin product, to mid-stage products, such as mazdutide, an investigational anti-obesity medicine. Eli Lilly even has highly exciting early-stage programs. It is working on a gene therapy for genetic hearing loss that appears to have cured one patient in a phase 1/2 study. Innovation is one of the keys to success in the pharmaceutical industry. In the past few years, Eli Lilly has shown that it is second to none in this department compared to its similarly sized peers.
Plus, there’s Eli Lilly’s excellent dividend track record to consider. The company’s payouts have increased by 165% in the past decade, so it is also an excellent pick for income seekers. It’s just one more reason — among many others — why Eli Lilly is an outstanding stock to buy. And despite the company’s shares rising significantly in recent years, it isn’t too late to get in on the action.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Should You Buy Eli Lilly Stock After Another Major Win? was originally published by The Motley Fool
