Eli Lilly stock pulled back from bullish gains Tuesday despite strong sales of its new weight-loss drug, Zepbound, and promising results in liver disease treatment.
Zepbound was on the market for just weeks in the December quarter. But sales climbed rapidly to $175.8 million. That was more than double the $75 million estimate from analysts polled by FactSet. Another forecast suggested Zepbound could come in with $125 million.
Importantly, Lilly also announced positive results from a study of tirzepatide, the chemical backbone behind Zepbound and diabetes drug Mounjaro, in a liver disease called metabolic dysfunction-associated steatohepatitis, or MASH. After a year, 74% of patients who received tirzepatide showed no signs of MASH and their liver fibrosis didn't worsen. Just 13% of placebo recipients hit the same marks.
The news suggests GLP-1 drugs, like tirzepatide, could play a part in treating MASH, formerly known as nonalcoholic steatohepatitis, or NASH. But these drugs won't be a "silver bullet" or provide a functional cure for the disease, Leerink Partners analyst Thomas Smith said in a report.
"The size of the potential market and nature of the disease provide ample opportunity for multiple winners among companies developing (MASH) therapeutics," he said.
Eli Lilly stock slouched a fraction to 705.03. Earlier, shares rose as much as 4.8% to 740. Shares ended the regular session on Monday extended, up 12% from a 629.97 buy point, following a January breakout from a flat base, according to MarketSmith.com. The profit-taking zone runs from 755.96 to 787.46.
Meanwhile, shares of companies working on MASH treatments collapsed. 89bio stock crashed 17% to 8.13, Akero Therapeutics stock tumbled 12.3% to 17.76, and Madrigal Pharmaceuticals closed at 201.44, down 11.3%.
Eli Lilly Stock: Zepbound Off To The Races
David Song, an investment partner at Tema ETFs, said Lilly is "doing exactly what they should be."
The company is investing in bolstering its obesity drug supply with a new $2.5 billion plant in Germany. It's also building out its research and development, evidenced by the MASH news Tuesday.
"Zepbound is off to a strong start as well after hitting pharmacy shelves on the fifth of December," Song said in an email to Investor's Business Daily. "In short, this was a straightforward quarter. What will be important during the year is further data readouts, like the positive MASH Phase 2 readout today and how the neurology story builds."
Notably, Mounjaro also put up a bullish performance in the fourth quarter. Revenue from the tirzepatide-based diabetes treatment grew nearly eightfold year over year, hitting $2.21 billion. That also handily beat Eli Lilly stock analysts' forecast for $1.73 billion in sales.
Third Bridge analyst Lee Brown says Lilly's direct-to-consumer website, LillyDirect, should help bolster sales of both "given available rebates for patients without insurance coverage for the drugs."
"Importantly, LillyDirect may encourage pharmacy benefit managers to expand coverage, particularly for Zepbound going into 2025 as managed care organizations consider how to market and price plans," he said in a report.
Strong Guidance For 2024 Sales, Profit
Overall, Lilly came up with adjusted profit of $2.49 per share and $9.35 billion in fourth-quarter sales. Earnings popped 19% and were well above the forecast for $2.30 a share. Sales advanced 28% to beat the Street's projection for $8.95 billion.
Third Bridge's Brown noted cancer drug Verzenio showed some strength. Sales jetted 42% higher to $1.15 billion. However, that missed expectations for $1.17 billion, according to FactSet. Diabetes drug Jardiance also put up a strong performance. Jardiance sales climbed 30% to $798.1 million and beat projections for $771.8 million.
Eli Lilly also provided promising guidance for the year. The company expects $40.4 billion to $41.6 billion in sales, easily above Wall Street's estimate for $39.27 billion. Lilly expects to earn an adjusted $12.20 to $12.70 per share. The midpoint of that outlook, $12.45, is slightly ahead of Eli Lilly stock analysts' forecasts for $12.39.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
