For decades, drugmakers have struggled to develop effective therapies to treat Alzheimer's disease, and though most have failed, researchers keep at it. That's hardly surprising. Alzheimer's disease affects some 6.5 million people in the U.S. alone, and even the one FDA-approved treatment for it is far from a cure.
Pharmaceutical giant Eli Lilly's (LLY -0.56%) potential Alzheimer's disease treatment is in late-stage clinical trials, and could be the next one to cross the regulatory finish line. And recently, Eli Lilly delivered positive news from the clinic that meaningfully improved its prospects for being able to compete in the Alzheimer's disease market.
Let's consider what that could mean for the company and its shareholders.
Better than Aduhelm?
Eli Lilly's Alzheimer's candidate, donanemab, targets the buildup of beta-amyloid plaque in the brain, which some experts believe is linked to the cognitive decline associated with the illness. Biogen's Aduhelm -- the only Alzheimer's treatment that has earned regulatory approval in the U.S. -- works the same way, at least in principle. Eli Lilly ran a phase 3 study in which it pitted donanemab against Aduhelm in treating patients with early symptomatic Alzheimer's disease.
A few weeks ago, the drugmaker reported some excellent results from this trial. During the study, 37.9% of patients treated with donanemab achieved brain amyloid plaque clearance, compared to just 1.6% of those treated with Aduhelm. That's a big difference, and it seems to indicate that donanemab could be more effective than Aduhelm.
However, there is still plenty of work to be done. This study was relatively small, with only 148 participants. And the recent data readout was from the six-month treatment mark. Secondary readouts will follow after 12 and 18 months.
Eli Lilly is also running a larger clinical trial with 1,800 participants, and it expects results from that study in mid-2023. If the results from this larger trial are positive, Eli Lilly could earn approval for an Alzheimer's disease medicine that could easily achieve peak annual sales well above $1 billion.
Plenty of other reasons to buy
Donanemab would be a welcome addition to Eli Lilly's portfolio, which already boasts several blockbuster products whose sales are still growing fast -- among them, the diabetes medicine Trulicity and the cancer treatment Verzenio. But Eli Lilly's greatest strength is its pipeline.
Just this year, the pharmaceutical company earned approval for Mounjaro, a new diabetes medicine that looks destined to be its next best-selling therapy as it earns additional regulatory approvals. (The company hopes to get it approved as a treatment for obesity, among other indications.)
But that's not all. Eli Lilly expects to bring four new products to market by the end of 2023.
"We are experiencing an unprecedented rate of new product launches for Lilly and undoubtedly one of the most impressive rates in our industry," said CEO Dave Ricks during the company's third-quarter earnings call. And Eli Lilly's innovations won't stop there. The company has numerous other exciting candidates in late-stage clinical trials that it hopes will earn approval further down the road.
Those candidates include Basal Insulin-Fc, a potential once-a-week insulin product. The company has close to two dozen late-stage programs. Even a 50% success rate for these will yield numerous new drugs for Eli Lilly and label expansions for its existing products.
In short, it has a robust business that should continue to deliver solid financial results every year. It's no wonder that the forward-looking market has rewarded Eli Lilly and its shareholders even in this down year for the market. The stock has been on fire for most of 2022, and is up by about 30% year to date.
Here's one more reason to consider adding shares of this top drugmaker. Eli Lilly is also an excellent dividend stock that has doubled its payouts over the past five years. Eli Lilly can provide both growth and income investors with what they want. That makes it a solid stock to buy right now.
