(LLY) Archives - Page 15 of 27 - Mad Hedge Fund Trader

The Biopharma That Keeps Beating the Odds

If you're on the hunt for a stock that has a history of outperforming the market, then Eli Lilly (LLY) may have caught your attention.

Unlike many dividend and pharma stocks, Eli Lilly has a knack for beating the market. Just take a look at the company's shares, which have skyrocketed by 153% since the end of April 2020. That's three times more than the market's return of only 50% during the same period.

Now, I know what you're thinking - is this performance sustainable? After all, with a tumultuous economic and market environment causing investors everywhere to hit the brakes, it's possible that Eli Lilly's past success might not be repeated. Some may question whether this stock is still worth buying now or if they've missed the boat altogether.

Investors are always on the lookout for a good deal, so it's natural to question whether Eli Lilly is still a worthwhile investment following a less-than-stellar first-quarter earnings report.

Like many companies in the healthcare industry, Eli Lilly felt the pandemic's impact on its bottom line. Its coronavirus therapeutics segment contracted, leading to an 11% drop in sales to approximately $7 billion and a 38% decrease in EPS to $1.49.

But don't let the numbers scare you off just yet.

The decline in coronavirus sales was expected, and the company's other medicines saw a 10% YoY increase in revenue. Besides, it's essential to remember that a single quarter's results don't necessarily reflect a company's long-term value for dividend investors.

While Eli Lilly may have taken a hit, it's still a company with plenty of potential for the future.

That is, Eli Lilly’s expansion journey isn't about to stop anytime soon. For one, the pharmaceutical giant is waiting for regulators to approve four programs, including donanemab, a treatment for Alzheimer's disease, and tirzepatide, which could help combat diabetes and obesity.

If approved, Eli Lilly's latest offerings will enter contested markets, but there's still a substantial opportunity for them to outperform their competitors and gain market share, particularly with tirzepatide. Although the company may not see rapid revenue growth as a behemoth drug company, with 21 programs in phase 3 clinical trials, moderate-paced growth is still on the horizon.

Going back to its Alzheimer’s treatment candidate, it looks like the company has finally found a working formula to combat this lifelong disease.

Recently, Eli Lilly released positive results from the latest phase 3 study of its donanemab treatment for early Alzheimer's disease. The news pushed the stock to soar over 6% today, tacking over $20 billion to the company's market value.

Dubbed the Trailblazer-ALZ 2 study, the trial aimed to determine whether donanemab could help slow the debilitating effects of Alzheimer's by reducing the decline in a key rating scale of Alzheimer's-induced impairment. And the results? They were nothing short of promising.

Patients taking donanemab experienced a 35% reduction in the rate of decline, and a 40% smaller decline in their ability to perform daily activities, even 18 months into the study.

And that's not all: nearly half of the participants, a whopping 47%, showed no decline on a scale measuring clinical dementia after a year of treatment - compared to just 29% taking a placebo.

This is fantastic news for Eli Lilly and for the millions of people suffering from Alzheimer's worldwide. With such promising results, the company's donanemab treatment could be a game-changer in the fight against this devastating disease.

In comparison, Biogen (BIIB) and Eisai's (ESALY) Leqembi slowed cognitive decline by 27% compared to placebo in a similar patient group.

Notably, the trials for these two drugs had vital differences, so direct comparisons are difficult to make at this stage. Nevertheless, Lilly is determined to move forward with donanemab, despite the risks associated with the drug.

If approved, donanemab could help patients maintain their cognitive function for longer, allowing them to continue their daily activities such as managing finances, driving, and engaging in hobbies.

Thus far, Eli Lilly's donanemab has shown a potential best-in-class clinical profile, leading to the company planning to file for FDA approval later this quarter.

The estimated peak sales for the drug have yet to reach a consensus due to shifting clinical profiles and changing market dynamics over the past year. However, the market's initial estimate suggests it could reach $5 billion-plus per year, as evidenced by Lilly's $20 billion increase in market capitalization following the announcement.

While this estimate may seem reasonable, it's important to note that there is a safety signal in the latest clinical data - brain swelling - that could potentially hinder the drug's commercial uptake. Full trial results will be crucial for investors to consider once they become available.

Nonetheless, the dire need for new Alzheimer's therapeutics and the significant untapped market make the drug's potential highly compelling.

Overall, Eli Lilly is an excellent long-term investment. It has a long history of success, and its strong position in the pharmaceutical industry speaks volumes. While there are no guarantees when it comes to the stock market, this biopharma has a proven track record of delivering impressive returns to its shareholders.

Despite its current high price tag, this leading pharmaceutical company has some exciting growth prospects that could make it the top dog in healthcare before the decade is out. With drugs like donanemab, a potential game-changer for Alzheimer's treatment, and Mounjaro, a type 2 diabetes medication with promising results, Eli Lilly's stock may indeed be worth considering for investors looking for growth potential.

April 13, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
April 13, 2023
Fiat Lux

Featured Trade:

(SMOOTH SAILING THROUGH ROUGH WATERS)
(NVO), (LLY), (SNY)

Smooth Sailing Through Rough Waters

Biotech Letter

Even in the toughest of times, some stalwart companies manage to maintain their footing and keep making strides. Novo Nordisk (NVO) has taken this feat to heart by continuing its success despite facing numerous market speed bumps—making it one resilient company worth considering.

Novo Nordisk, a veteran player in the pharmaceutical industry, has been consistently delivering impressive financial results. In 2022, the company's net sales increased by a remarkable 26% year over year, amounting to approximately $25.5 billion. However, it's worth noting that currency exchange rate fluctuations may have played a role in this growth.

The company continues to showcase impressive financial performance, with net sales surging by 26% to $25.5 billion in 2022. Even after accounting for currency exchange rate fluctuations, the pharmaceutical company's revenue still jumped by a commendable 16%. Additionally, Novo Nordisk's net profit increased by 16% to $8 billion, solidifying its position as a top-performing player in the industry.

Moreover, Novo Nordisk remains a prominent contender in the diabetes drug arena, capturing almost a third of the market share as of November 2022.

Novo Nordisk's market dominance in diabetes drugs owes much to its portfolio of effective and innovative products like Rybelsus, Ozempic, and the recently approved Wegovy. This dynamic trio has been instrumental in driving the company's sales growth and maintaining its edge in the competitive pharmaceutical industry.

Ozempic has been a critical player in Novo Nordisk's revenue stream, bringing in over a third of the company's total revenue at just under $8.9 billion last year.

Novo Nordisk's market exclusivity for Rybelsus and Ozempic remains intact, giving the Danish pharmaceutical company a few more years to maximize its potential.

Both drugs are injected weekly and heavily marketed in the U.S. With patent expirations in China in 2026, followed by Europe and Japan in 2031, and the U.S. in 2032, Novo Nordisk is likely to maintain its strong position for a while yet.

As for Wegovy, the newcomer in the obesity care market contributed just 3% of the company's total revenue, with $930 million in sales for 2022. However, with its recent approval for chronic weight management by the FDA and in the UK, the potential for growth and expansion is promising.

In its 2022 annual report, Novo Nordisk announced that it controls over half the global market for GLP-1 drugs, with a market share of 54.9% in 2022, up from 52.7% in 2021. Its primary competitors include Eli Lilly's (LLY) Trulicity and Sanofi-Aventis's (SNY) Adlyxin, which exited the U.S. market at the end of 2022.

Overall, the international diabetes market seems to favor Novo Nordisk, with its market share rising from 29.3% to 31.9% from 2020 to 2022.

The company is projected to continue its success, with sales and operating profits expected to increase in the 13% to 19% range at CER in 2023, according to its annual report. Analysts' average estimate of $30.1 billion in 2023 revenues aligns with this projection, representing a 16.7% increase at CER.

Leveraging this dominance, the company is further strengthening its position in the diabetes market, a disease affecting over 415 million people worldwide, and the numbers continue to grow. According to the Centers for Disease Control and Prevention, there will be over 500 million patients by 2040.

For instance, its recent announcement of the positive results of its Phase 3b Pioneer Plus clinical trial of Rybelsus is a further testament to its ability to innovate and stay ahead in the diabetes treatment arena. The trial showed a statistically significant reduction in blood sugar levels, indicating the potential for a more intense treatment option for type 2 diabetes patients.

Meanwhile, Obesity, a major risk factor for diabetes and other health problems, also presents a significant market opportunity for Novo Nordisk.

In fact, the company's revenue from these treatments doubled in the previous year, propelling its overall sales to an upward trajectory for the past half-decade.

Needless to say, Novo Nordisk is showing no signs of slowing down, and its strong position in the diabetes and obesity treatment market is poised to fuel its growth for the foreseeable future. I suggest you buy the dip.

April 11, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
April 11, 2023
Fiat Lux

Featured Trade:

(NOT NOW, BUT SOON)
(JNJ), (NVO), (LLY), (AMGN), (GILD), (ABBV), (BMY)

Not Now, But Soon

Biotech Letter

During times of market turbulence, many investors may find themselves hesitant to participate due to the uncertainty and risks involved. However, one potential strategy to weather the storm could be to seek out dividend stocks.

By investing in these types of equities, individuals can find a sense of stability and security, as they often offer a reliable source of income regardless of market fluctuations. In short, dividend stocks can serve as a safe harbor amid a choppy investment climate.

If you're looking for a healthcare stock with some serious street cred, check out Johnson & Johnson (JNJ).

Before delving into the company, knowing that JNJ’s stock price isn't exactly bargain-bin material is crucial. Still, it's not the most expensive pharmaceutical company out there, either. Novo Nordisk (NVO) and Eli Lilly (LLY) are commanding higher valuations, while JNJ’s peers like Amgen (AMGN), Gilead Sciences (GILD), AbbVie (ABBV), and Bristol-Myers Squibb (BMY) are trading at a lower price-to-free-cash-flow ratio.

Let's not forget that JNJ isn't just a one-trick pony in the pharmaceutical game.

With around 30% of its revenue from medical devices, we can't compare it apples-to-apples with other pharma companies. Peers in the medical devices sector typically trade at higher valuation multiples, so it's essential to keep that in mind when evaluating JNJ's price-to-free-cash-flow ratio.

Moreover, this mega-brand dominates both the pharmaceutical and consumer goods scenes. With fingers in many pies - pharma, med tech, and consumer goods - JNJ has made quite the name for itself.

Despite being a seasoned player, Johnson & Johnson (JNJ) still has some spring in its step; come year-end, the company will be shaking things up with a spin-off of its consumer segment into a new entity, Kenvue.

JNJ’s upcoming spin-off is about sharpening its focus on what matters - its pharma business. And for good reason - this is where the big bucks are made.

The healthcare giant’s immunology and cancer drugs are outperforming the rest of the pack, with two key players, Stelara and Tremfya, delivering some serious sales growth last year. Together, they raked in a cool $12.3 billion, proving that sometimes, less really is more.

JNJ’s pharma segment is crushing it. Darzalex, the multiple myeloma med, racked up an impressive $8 billion in sales, a 32% boost from the previous year. Meanwhile, prostate cancer drug Erleada wasn't far behind, with a 45.7% increase in sales to $1.9 billion.

All in all, JNJ's pharma segment hauled in a massive $52.5 billion in revenue in 2022. Not too shabby.

Looking deeper into its performance in fiscal 2022, JNJ reported a slight increase of 1.2% YoY in sales, reaching $94.9 billion, but currency effects had a negative impact. However, adjusted earnings per share increased by 3.6% YoY, with operational growth at 9.2%.

The "Consumer Health" segment reported a 0.5% decline in revenue, but adjusted operating growth was 3.6%.

The "Pharmaceuticals" segment, responsible for more than half of revenue, increased sales by 1.7% YoY to $52.6 billion, with operational growth at 6.7%.

The "MedTech" segment increased revenue by 1.4% YoY to $27.4 billion, with operational growth at 6.2%.

For fiscal 2023, Johnson & Johnson is expecting revenue growth of 4.5% to 5.5% and adjusted earnings per share growth of 3% to 5%.

Despite the positive reports, JNJ investors are still anxious about the future primarily because of the impending patent expirations of existing products. Unfortunately, the company is heading towards a patent cliff, as it faces the challenge of replacing revenue from products with expiring patents.

Stelara generated $9.7 billion in revenue in fiscal 2022 and will lose patent protection in 2023. Simponi, which generated $2.2 billion in revenue in fiscal 2022 and will lose patent protection in 2024, are two of the biggest concerns.

These two products account for 12.5% of the company's total revenue and 22.5% of the pharmaceutical segment revenue. Replacing these sales will not be an easy feat.

Additionally, in 2027, JNJ will lose patent protection for two other vital drugs - Xarelto and Imbruvica, which generated $2.5 billion and $3.8 billion in revenue in fiscal 2022.

To resolve these concerns, JNJ is putting its money where its mouth is regarding innovation. The company invested a whopping $14.6 billion in R&D in 2022 alone, and it looks like it's paying off. With plenty of promising drugs in the pipeline, JNJ is poised to continue its growth trajectory in the coming years.

When it comes to dividends, JNJ is royalty. With a 60-year track record of annual dividend increases, JNJ company has earned the coveted title of Dividend King.

JNJ boasts a healthy payout ratio of 41% and a juicy dividend yield of 2.8%, well above the S&P 500's average yield of 1.7%. The company's steady cash flow quickly covers these payouts, making it a solid choice for investors seeking reliable income.

While JNJ may be a top-notch investment option in the long run, the current market conditions make it a tad pricey. So, for now, just give it a spot on your watchlist and wait for the dip to go for a bargain. Remember, patience is not just a virtue but also a lucrative strategy in investing.

jnj

March 2, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
March 2, 2023
Fiat Lux

Featured Trade:

(AN UNBEATABLE STOCK REFORMING THE SECTOR)
(LLY), (JNJ), (SNY), (NVO)

An Unbeatable Stock Reforming The Sector

Biotech Letter

After starting 2023 with such great promise, practically all major stock indexes in the United States fell last month. Stocks dipped because of the unrelentingly rising inflation, which economists anticipate to lead to another round of seemingly unstoppable interest rate hikes later in the year.

What can stock investors do in this climate?

The ideal stocks in this situation are those defensive in nature because they tend to be less reactive or sensitive to macroeconomic conditions. As a result, defensive stocks deliver relatively solid price performance in bear and bull markets.

Defensive stocks are companies whose products or services are considered essential or necessary, regardless of economic conditions. These companies typically provide products or services that people and businesses cannot easily do without, such as healthcare, utilities, and consumer staples. Because these companies are less susceptible to fluctuations in the economy, they are often viewed as a safe investment option during times of market uncertainty.

Eli Lilly (LLY) stands out as one of the best defensive stocks in the biotechnology and healthcare sector today.

With over 38,000 employees across the globe and products commercially available in at least 120 countries, the company is no doubt a dominant presence in the industry. It is a global pharmaceutical organization that develops, manufactures, and markets drugs for a wide range of medical conditions, including diabetes, cancer, and autoimmune disorders.

The company has been in operation for over 140 years and has a strong reputation for innovation and research. Apart from Johnson & Johnson (JNJ), Eli Lilly’s market capitalization of roughly $327 billion makes it the most prominent pharmaceutical business worldwide.

Meanwhile, Eli Lilly pays out a dividend that yields around 1.1%. Over the trailing decade, this giant drugmaker’s dividend has experienced a consistent increase of about 130%.

Given that Eli Lilly is a healthcare company that produces medicines for life-threatening and chronic conditions, it can be considered a defensive stock.

In 2022, the company’s shares gained approximately 32.4% thanks to its solid organic growth and deep and diverse new treatments and drugs pipeline. Considering its history and track record combined with the market's volatility, Eli Lilly also benefited from its image of being a “safe” stock.

Despite the uncertainties, Eli Lilly looks to be poised for another healthy run in 2023. In terms of growth, the company is projected to climb higher courtesy of its newly approved diabetes and obesity drug, Mounjaro, which shows impressive potential. The company also has a promising pipeline, with several high-value candidates in the immunology and dermatology segments expected to gain approval this year.

Recently, Eli Lilly announced that it would put a cap on the out-of-pocket expenses for insulin at $35 per month for uninsured patients and those covered by commercial insurance. The company also surprised the public by announcing its plan to lower the price of this highly controversial drug by 70%.

After drugmakers jacked up the price of insulin in the past years, this drug became the symbol of out-of-control healthcare costs.

In the US alone, over 30 million people suffer from diabetes. Of these patients, more than 7 million need to take insulin every day. The alarming part of this situation is that 1 in 7 patients who require insulin daily find their budget affected at “catastrophic” levels because of the medication’s cost. These patients allot a minimum of 40% of their disposable income to the treatment alone.

This is why Eli Lilly’s announcement marked a significant development in the sector after months of aggressive lobbying to lower the price of the drug. With the company’s decision, the pressure became more intense for other drugmakers to follow suit. Specifically, major insulin distributors like Sanofi (SNY) and Novo Nordisk (NVO) are urged to apply the same rule.

All in all, Eli Lilly has a virtually recession-proof model and a positive long-term outlook. I suggest you buy the dip.

February 7, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
February 7, 2023
Fiat Lux

Featured Trade:

(AN ICONIC BLUE-CHIP PHARMA SELLING AT A DISCOUNTED PRICE)
(PFE), (MRNA), (NVAX), (BNTX), (LLY), (NVO)

An Icon Blue-Chip Pharma Selling At Discounted Price

Biotech Letter

Pfizer (PFE) possibly contributed more than any other business in getting the world back to normal from the pandemic. It was rewarded with an impressive windfall courtesy of its twin COVID-19 programs: the blockbuster vaccine and the top-selling treatment, Paxlovid.

However, the world has already stopped fretting over COVID. As expected, Pfizer is paying the price for this turn of events. Sales of its COVID blockbusters are estimated to decline by more than 60% in 2023 after raking in a total of roughly $57 billion in 2022.

The company projects that Comirnaty vaccine sales would fall from $37.8 billion in 2022 to $13.5 billion in 2023, while Paxlovid would drop from $18.9 billion to $8 billion. After all, the United States and several countries already have massive stockpiles of the Pfizer vaccine and Paxlovid, recorded under the 2022 revenue. It would take until June 2023 to work through them.

In effect, Pfizer and other COVID plays like Moderna (MRNA), Novavax (NVAX), and BioNTech (BNTX) have fallen out of favor.

Still, Pfizer remains positive about the future of its COVID franchise. The company anticipates that 24% of Americans, or about 79 million, will get a COVID vaccine in 2023. In comparison, 31% or roughly 104 million, received the vaccine in 2022. Pfizer also expects to sustain its dominance, with a 64% market share for the vaccine alone.

Moreover, Pfizer has a robust pipeline—and pipelines are the driving force behind drug stocks.

With mRNA technology's momentum, Pfizer is optimistic about its combined flu-COVID vaccine. The company foresees around 132 million Americans lining up for this two-disease vaccine, which it hopes to launch by 2026.

Shifting the discussion away from COVID, Pfizer estimates non-COVID revenue to increase by 6% annually through 2025, then projects a similar trajectory or better every year through 2030 to hit at least $70 billion.

Announcing these projections is a bold move, especially since Pfizer faces one of the most significant patent cliffs starting 2025 to 2028. Several top-selling treatments, which generate roughly $17 billion in yearly sales, will lose patent protection and face generic competition.
Pfizer is aggressively filling these anticipated voids with acquisitions, including three exciting companies: Global Blood Therapies, Biohaven Pharmaceuticals, and Arena Pharmaceuticals.

In 2022 alone, the company spent $26 billion, which granted Pfizer access to promising drugs for sickle-cell anemia, migraines, and ulcerative colitis.

By 2030, the company projects these and its subsequent acquisitions to generate at least $25 billion in annual revenue. This means it’s still on the lookout for more acquisitions.

Actually, the company estimates that it’s just 40% on the way to hitting its target of $25 billion in 2030 revenue coming from acquired treatments. This means the company would most likely spend another $50 billion in acquisitions to reach its goal.

In terms of its internal pipeline, Pfizer’s candidates can rake in at least $20 billion in sales by 2030. Some of its key launches include vaccines for the flu, meningitis, and respiratory syncytial virus (RSV). It also has treatments targeting blood cancer and atopic dermatitis.

Meanwhile, its oral diabetes and obesity products, which are currently in clinical trials, have the potential to generate roughly $10 billion in annual sales. If approved, these would allow Pfizer to go head-to-head against Eli Lilly (LLY) and Novo Nordisk (NVO).

Overall, Pfizer is an “iconic, blue-chip company” that’s on a discount these days. It is down roughly 15% this 2023, offering an excellent window for investors who want to buy the stock.

The company trades for 13 times its estimated earnings in 2023 and yields 3.7%, which is over double the S&P’s dividend rate. With this payout, along with its solid earnings and one of the best balance sheets across the industry, Pfizer looks incredibly safe.

However, it’s essential to be realistic. Pfizer’s goal is to go through this year minimally unscathed. Although its performance in 2022 was impressively strong, with revenue surging to a whopping $100 billion compared to $42 billion in 2020, the year 2023 is a reset period for the business.

January 27, 2023

Diary, Newsletter, Summary

Global Market Comments
January 27, 2023
Fiat Lux

Featured Trade:

(JANUARY 25 BIWEEKLY STRATEGY WEBINAR Q&A),
(RIVN), ($VIX), (SPX), (UUP), (NVDA), (TLT), (LLY), (AAPL), (RTX), (LMT), (USO), (OXY), (TSLA), (UNG), (MSFT)

CLICK HERE to download today's position sheet.

Tag Archive for: (LLY)