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CEO Eli Lilly on Reducing Recommendations, Potential Obesity Cure, and Alzheimer’s Study
November 1, 2022
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Eli Lilly (LLY) CEO David Ricks on Tuesday expressed optimism about the drug maker’s innovation efforts. We share this position, despite the cluttered quarterly report of the holding Club, published earlier in the day. “The fundamentals of business are really strong,” Ricks said in a CNBC interview with Jim Cramer. “Seventy percent of our revenue comes from relatively new products, and it’s up 24% in the third quarter in constant currency, which means a really strong operating performance for the quarter.” Overall, the Indianapolis pharmaceutical giant’s third-quarter sales and earnings beat analysts’ expectations. However, investors were disappointed by the company’s decline in full-year revenue and earnings forecasts, which sent the stock down 2.6% to close at $352.58. While stocks closed well off their session lows of $340.75, we saw them drop on Tuesday. This is especially true when you consider that stocks closed at an all-time high on Monday as they have been significantly better throughout the year. Lilly shares are up more than 27.5% year-to-date compared to the S&P 500’s 19% drop in 2022. Eli Lilly, which accounts for about 40% of its sales overseas, largely attributed the downgrade to the strong US dollar. . Ricks said Eli Lilly expects roughly $300 million in headwinds in revenue, based on current exchange rates, with “most of that going to fourth quarter bottom line.” Eli Lilly has already reported three quarters and now expects annual sales of $28.5 billion to $29 billion and adjusted earnings per share of $7.70 to $7.85. The preliminary forecast assumed revenue from 28.8 to 29.3 billion dollars and earnings per share from 7.90 to 8.05 dollars. New Diabetes Drug Ready for Success One of the main reasons we like Eli Lilly is the company’s new type 2 diabetes drug, which has also shown promise as a treatment for obesity. While official approval for weight loss could be in late 2023 or early 2024, the drug is already being prescribed for diabetes. And so far the launch is going better than expected. Not only did third-quarter revenue hit $187 million in line with Top Street’s expectations, but Ricks told CNBC Tuesday that the Mounjaro-branded drug co-exists well in the market with Trulicity, another of the company’s type 2 diabetes drugs. Mounjaro received FDA approval in May and Trulicity in 2014. The drugs are in the same class of drugs, but Munjaro has some additional innovations related to incretin hormones. “We were probably expecting a little more cannibals than we saw,” Ricks said, referring to the idea that Munjaro’s market debut would cut Trulicity’s sales. “Trulicity held up pretty well. Most of Munjaro’s growth is new patients entering this class due to medications that didn’t help them with their diabetes, so it’s great news the class’s growth for us as we look forward to the future. ” News of Lilly’s Alzheimer’s Trial In late September, we were encouraged by the positive results of a study on an experimental drug for the treatment of advanced Alzheimer’s disease jointly developed by Japanese pharmaceutical company Eisai and American competitor Lilly Biogen (BIIB). Reason? which Eli Lilly is working on to treat the most common form of dementia, both of which aim to reduce the accumulation of beta-amyloid protein in the brain.According to Ricks, the results of the latest Eisai-Biogen study are actually “great news for scientists,” “because professionals need reassurance that removing amyloid plaques can reduce the burden of Alzheimer’s disease.” “Our study is fully credited,” Ricks added, noting that the FDA has agreed to review Lilly’s Alzheimer’s drug, called donanemab, as part of an accelerated approval process. birth. “The data will start coming in here quickly, and we hope to have definitive evidence by the middle of next year that this is helping patients.” (The Jim Cramer Charitable Foundation has a long LLY length. See here for a full list of stocks.) As a CNBC Investing Club subscriber with Jim Cramer, you will receive a trade notice before Jim completes the trade. Jim waits 45 minutes after sending a trade notice before buying or selling shares in his charitable foundation’s portfolio. If Jim was talking about a stock on CNBC, he waits 72 hours after a trade alert is posted before making a trade. THE ABOVE INFORMATION ABOUT INVESTMENT CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY RESPONSIBILITIES OR OBLIGATIONS ARE OR ARISING IN CONNECTION WITH YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT IS GUARANTEED.
David Ricks, Eli Lilly CEO
Scott Mlyn | CNBC
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