Biotech giant Eli Lilly (LLY 1.19%) has been firing on all cylinders this year. The company's popularity rose along with weight-loss medicine, an area in which it's one of the leaders. Its financial results have been solid, and its stock performance has crushed that of the broader market.
Some might wonder whether they've missed the boat with this drugmaker. Can Eli Lilly pull off a similar performance in 2024?
There will be more key approvals
Eli Lilly scored several approvals this year, including one for Omvoh in treating ulcerative colitis and another for cancer treatment Jaypirca. These approvals weren't the reason Eli Lilly crushed the market this year, but they probably didn't hurt. Next year, the biotech could launch yet another brand-new product, one much more promising than Jaypirca or Omvoh.
Eli Lilly is currently awaiting word on its application for donanemab, a medicine for Alzheimer's disease (AD). The U.S. Food and Drug Administration hasn't approved many AD treatments over the past two decades due to the complexity of developing effective drugs for the disease. Many biotech companies have tried to do so and mostly failed.
That's why it would be a big deal if Lilly does earn the green light from the agency for donanemab, which would almost certainly become a blockbuster. The research service Evaluate Pharma listed it as one of the most valuable R&D projects in the industry, with a net present value of $8.8 billion and an estimated $2.1 billion in revenue by 2028. If donanemab crosses the final regulatory obstacle in its way, it should meaningfully help Eli Lilly's stock performance next year.
Financial results could be stronger
Eli Lilly's earnings have been solid this year and have helped fuel the company's performance. In the first nine months of the year, the biotech's revenue jumped by 17% year over year to $24.8 billion. However, there are at least three major reasons why things could get even better for the company in 2024.
First, those medicines whose approvals Lilly earned this year should gain significant traction, and start making something of an impact on its financial results.
Second, it won't have to deal with the negative impact of its COVID-19 portfolio. In the first nine months of 2022, Eli Lilly recorded almost $2 billion in sales of coronavirus antibodies, but nothing at all in the same period of 2023. Once that comparison is out the window, it will boost year-over-year revenue growth.
Third, this year, Eli Lilly finally earned approval for Zepbound, a weight-loss medicine. It's marketed as Mounjaro for diabetes patients, and it's been on the market since last year. Even though physicians were already prescribing it to target obesity, those prescriptions should significantly increase now that the drug is officially approved for the indication.
Mounjaro/Zepbound could become one of the best-selling medications in the history of the industry, according to some estimates. Earning a label expansion as a weight-loss medicine was an essential step in that journey. The drug's sales will grow rapidly next year, hopefully boosting Eli Lilly's top line to new heights.
Beyond the next 12 months
There should be more positive developments for Eli Lilly next year. For instance, the company is still working on a potential once-weekly insulin product, insulin efsitora alfa. It could announce progress in that department. It should also earn approvals for more new products besides donanemab; those could allow the company to maintain its momentum. However, it's essential to acknowledge that predicting how the market will behave in the next 12 months is challenging.
So, although Eli Lilly's short-term prospects look great, it isn't obvious that they'll translate to strong stock-market performance as they did this year. More importantly, Eli Lilly's longer-term prospects also look excellent. Investors who decide to buy shares now should be happy they did in five years or more, regardless of what happens to the stock price in 2024.
