Eli Lilly obesity drug data shines, shares rise

A sign is pictured outside an Eli Lilly and Company pharmaceutical manufacturing plant at 50 ImClone Drive in Branchburg, New Jersey, March 5, 2021. Picture taken March 5, 2021. REUTERS/Mike Segar/File Photo

Lilly and Co. on Thursday said its potential blockbuster obesity drug achieved a goal of helping patients lose more than 20% of their weight in a late-stage clinical trial, and its shares rose about 3%.

The U.S. drugmaker also reported first-quarter earnings that topped Wall Street estimates.

The drug, tirzepatide, which is also being studied as a treatment for type 2 diabetes, demonstrated up to 22.5% weight loss in adults with obesity.

“The data likely validates Street thinking that tirzepatide will become a dominant player in the obesity market,” Wells Fargo analyst Mohit Bansal said in a note, adding that he expects about $4 billion in peak sales.

Mizuho Securities analyst Vamil Divan said the drug “has potential to be a multibillion-dollar product” for both diabetes and weight loss.

Additionally, the company said it expects to complete initial submission of data on its experimental Alzheimer’s treatment, donanemab, to the U.S. Food & Drug Administration in the current quarter as it seeks accelerated approval.

Lilly in February pushed back its timeline to complete the donanemab application to sometime later in 2022 from the first quarter in light of a U.S. proposal that would severely limit Medicare coverage for drugs in its class.

In April, the U.S. Centers for Medicare & Medicaid Services (CMS) decided to allow standard reimbursement only for Alzheimer’s drugs approved under the traditional FDA process based clear proof of patient benefit, rather than removal of brain plagues or other secondary goals that might slow cognitive decline.

The decision came after a controversial accelerated approval for Biogen Inc’s similar Alzheimer’s drug Aduhelm.

Lilly expects a decision from the FDA on donanemab in early 2023, which would be close to when data will be available from its late-stage study, Chief Scientific Officer Daniel Skovronsky said.

He added that the company believes the timing “would enable parallel discussions with CMS regarding outright coverage and expedited review time for full FDA approval.”

Still, Mizuho’s Divan said, “there’s almost no expectations for sales from donanemab this year or next year, just given the challenges that Biogen had on the reimbursement side.”

Lilly reported adjusted first-quarter earnings of $2.77 per share, topping analysts’ estimates of $2.32, according to IBES data from Refinitiv.

It now sees full-year adjusted earnings of $8.15 to $8.30 per share, down from its prior forecast of $8.50 to $8.65 per share, in part due to accounting changes in how it reports results.