Eli Lilly stock surged Thursday after newcomer diabetes drug Mounjaro blew past sales projections and led to promising weight loss in a Phase 3 study.
During the first quarter, Mounjaro brought in $568.5 million in sales, well ahead of expectations for $433 million, according to FactSet.
Lilly now is trying to pivot Mounjaro into and obesity treatment. In a study called Surmount-2, Eli Lilly tested Mounjaro in patients who are overweight or have obesity and type 2 diabetes.
Recipients lost up to 15.7% of their body weight, or about 34.4 pounds. Lilly now plans to begin submitting data to the Food and Drug Administration ahead of a request for approval.
On today's stock market, Eli Lilly stock jumped 3.7% to close at 390.35.
Eli Lilly Stock: Mixed First Quarter
Across all its businesses, Eli Lilly reported $6.96 billion in sales. Revenue decreased 11% as sales of Covid antibodies completely disappeared from Lilly's balance sheet. In the year-earlier period, Lilly reported $1.47 billion from its Covid products.
Excluding the Covid-related decline, Lilly said total sales grew 10%. They also beat forecasts from analysts covering Eli Lilly stock for $6.86 billion.
Adjusted earnings came in light, however, at $1.62 per share vs. expectations for $1.73, according to FactSet. Earnings crashed 38% year over year.
But Lilly raised its sales outlook for the year by $900 million and now expects $31.2 billion to $31.7 billion. The company also expects to earn $8.65-$8.85 per share, minus some items. Eli Lilly stock analysts projected adjusted profit of $8.41 a share and $30.59 billion in sales.
Diabetes Drugs Drive Guidance
Edward Jones analyst John Boylan credited demand for diabetes drugs as the driving factor behind AbbVie's guidance increase. He also noted the strength Mounjaro showed in final-phase testing for weight loss. The clinical need for obesity treatment should drive demand skyward, he said.
"We saw higher costs this quarter associated with the launching of new products and higher research and development costs," he said in a note to clients. "We consider this money well spent considering the strong results we saw from Mounjaro in diabetes, the positive obesity data and the potential we see for Lilly's current drugs and product pipeline."
The obesity treatment race is buoying Eli Lilly stock. It pits Lilly, Amgen and Viking Therapeutics against Novo Nordisk. The latter already has an approved drug called Wegovy.
Highly Rated Pharma Stock
Other highlights included a 14% sales jump for diabetes treatment Trulicity. Trulicity generated $1.98 billion in sales, beating forecasts for $1.86 billion, said Lee Brown, global sector lead for health care at research firm Third Bridge.
Experts are also excited about Verzenio, a treatment for breast cancer, Brown said in his note to clients. Verzenio sales surged 60% to $750.9 million, though fell short of "tremendous expectations" for $784 million.
Lilly shares recently topped a buy point at 376.41 out of a cup-with-handle base, according to MarketSmith.com. Lilly shares also have a strong IBD Digital Relative Strength Rating of 91. That puts their 12-month performance in the top 9% of all stocks regardless industry group.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
