Eli Lilly (LLY -1.00%) and its shareholders are sitting pretty right now. The company has defied the broader market sell-off -- with its stock climbing by 11% since the beginning of the year. Eli Lilly owes this performance to a combination of factors. The drugmaker specializes in diabetes medicines, and this chronic illness won't take a break just because we are facing challenging economic conditions. Also, Eli Lilly has a deep pipeline with dozens of programs that could expand its lineup.
Here is one more reason Eli Lilly is doing well right now: The company recently earned approval for Mounjaro, a therapy that targets type 2 diabetes (T2D). Mounjaro could be instrumental to Eli Lilly's growth in the coming decade and beyond. In fact, some analysts have made impressive predictions for the medicine. Here's the rundown on Mounjaro's potential prospects and what that could mean for Eli Lilly.
Exciting peak sales projections
The diabetes drug market is highly competitive. And in such an environment, it is even more challenging to earn approval for brand-new therapies since they often have to prove just as effective as existing treatments (if not more) in clinical trials, as opposed to being pitted only against placebos in studies. Mounjaro passed this test with flying colors.
In a pivotal study, Eli Lilly investigated the efficacy of Mounjaro in three separate doses and compared it to Novo Nordisk's semaglutide in only one dose (1mg). Mounjaro proved more effective at reducing T2D patients' body weight and A1C levels (a measure of blood glucose) across the board, demonstrating, at the very least, non-inferiority compared to semaglutide 1mg dose.
Mounjaro is the first dual GIP and GLP-1 receptor agonist approved by the U.S. Food and Drug Administration (FDA). GIP and GLP-1 receptor agonists mimic hormones in the body that help control blood sugar levels. Examples of GLP-1 receptor agonists include Eli Lilly's own Trulicity, which has been the drugmaker's best-selling medicine for some time.
Trulicity has been highly successful in its own right. But Eli Lilly's new crown jewel could far surpass it. According to analysts, Mounjaro could hit peak sales of $25 billion. To put this in perspective, note that AbbVie's immunology medicine Humira is the best-selling drug in the history of the industry. But even at its peak, Humira's sales reached "only" $20.7 billion. That was last year.
Humira could improve that milestone this year. But the medicine will start facing generic competition in the U.S. in 2023, meaning it is unlikely ever to hit peak sales of $25 billion. Mounjaro will likely have to score label expansions to meet its full potential. The FDA has, thus far, approved the medicine for glycemic control in T2D patients. Eli Lilly will also seek approval for it to help induce weight loss, among other indications.
In another study, patients taking Mounjaro achieved weight loss of up to 22.5% compared to those taking a placebo, so Mounjaro's approval in helping control obesity seems likely.
Plenty more reasons to invest
Investors shouldn't put their complete faith in analysts' estimates. The important takeaway to remember is this: Mounjaro represents a new class of diabetes medicines that will, in all likelihood, achieve and surpass blockbuster status. Mounjaro helps demonstrate Eli Lilly's ability to innovate, particularly in the diabetes market.
There are plenty of other pipeline candidates the company is working on, too. They include Basal Insulin-Fc (BIF), a potential once-weekly insulin option for patients with T2D that is undergoing phase 3 studies. In other therapeutic areas, Eli Lilly is targeting Alzheimer's disease with donanemab.
The company recently submitted an application for pirtobrutinib, a potential new cancer therapy, to the FDA. Eli Lilly's newer approvals also include cancer treatment Retevmo, which first earned the green light in 2020. Here is the bottom line.
In the next few years, Eli Lilly will continue to strengthen its lineup with brand new approvals that will help it grow its revenue and earnings for a while before running into patent cliffs. That's one key reason this pharma stock is worth buying today and holding onto for a while.
