Eli Lilly stock is Wednesday's IBD Stock Of The Day. The drugmaker is well-known for its weight-loss and diabetes drugs, but shares are rallying on a gene therapy that could restore hearing loss.
On Tuesday, Lilly subsidiary Akouos said an 11-year-old child with profound hearing loss from birth started hearing again within 30 days of receiving its gene therapy. The drug was developed for people with hearing loss due to mutations in the otoferlin gene. This gene is associated with deafness.
Scientists have been working on gene therapy for hearing loss for 20 years, Dr. John Germiller, an attending surgeon and director of clinical research in the otolaryngology division at the Children's Hospital of Philadelphia. He was a principal researcher in the Akouos study.
"These initial results show that (gene therapy) may restore hearing better than many thought possible," Germiller said in a press release.
On Wednesday, Eli Lilly stock rose back into a buy zone, which runs from 629.97 to 661.47, according to MarketSmith.com. Shares initially broke out of a flat base on Jan. 4. The shares rose a fraction to close at 633.70
Eli Lilly Stock: Focusing On Unmet Needs
Lilly notes hearing loss is a "significant area of unmet need." The company estimates there are about 200,000 people who have hearing loss due to otoferlin genetic mutations.
"Millions of individuals worldwide have disabling hearing loss because one of their genes generates an incorrect or incomplete version of a protein the ear requires for hearing," the company said in a news release. "Delivering a healthy version of the gene to a target cell within the inner ear has the potential to restore auditory function and enable high-acuity physiologic hearing."
Success for Akouos could be another feather in Lilly's business development cap. Eli Lilly bought the small biotech company in late 2022 for $487 million. The deal also includes a contingent value right that brings the total deal amount up to about $610 million.
Lilly Is An Active Acquirer
Lilly has been particularly active in the deal department. In 2023 alone, Eli Lilly made several buyouts that topped $1 billion apiece. They include the $1.4 billion takeover of cancer-focused biotech Point Biopharma and the acquisition of Versanis Bio for up to $1.93 billion, depending on milestones.
The latter feeds into Lilly's burgeoning obesity treatment portfolio. Versanis is working on methods of preserving muscle mass while improving fat loss.
Muscle mass loss is a common problem for patients who receive a weight-loss drug like Zepbound or Wegovy — the latter from rival Novo Nordisk. These drugs mimic gut hormones to improve feelings of satiety and slow how fast the stomach empties itself.
But patients often see rebounds in weight when they stop taking these GLP-1 drugs, partly due to lower muscle mass. Lower muscle mass slows the metabolism. It also makes keeping up with exercise more difficult.
Eli Lilly stock investors are hyper focused on the company's efforts in weight loss. Novo Nordisk stock is also under the microscope. Novo shares also moved back into a chase zone Wednesday, which runs from 105.69 to 110.97.
Earnings Due Feb. 6
Eli Lilly is due to report its fourth-quarter earnings on Feb. 6.
Analysts expect the pharma company to report adjusted profit of $2.44 per share and $8.95 billion in sales. Earnings would jump nearly 17% while sales would increase close to 23%, according to FactSet.
This could also prove a strong quarter for Lilly's newest diabetes drug, Mounjaro. Mounjaro uses the same active ingredient as Zepbound, the weight-loss drug. Analysts following Eli Lilly stock expect Mounjaro sales to surge 495% to $1.66 billion. Zepbound was only approved two months ago. The Street projects $75 million in sales for its first partial quarter on the market.
Other notable news could include an update on Eli Lilly's efforts in Alzheimer's disease treatment. The company's drug, donanemab, has been shown to slow cognitive decline in people with an early form of the disease. Lilly expects the Food and Drug Administration to make an approval decision on donanemab in the current quarter.
If successful, donanemab would rival Biogen and Eisai's drug, Leqembi. Leqembi and donanemab both remove abnormal protein in the brain associated with Alzheimer's disease.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
