Eli Lilly stock (NYSE: LLY) currently trades at $459 per share, roughly 150% above its level in March 2021, and its valuation looks stretched now, in our view. LLY saw its stock trading at around $324 in late June 2022, just before the Fed started increasing rates, and is now 40% above that level, outperforming the broader S&P 500, which gained about 16% during this period. The recent surge in LLY stock can be attributed to optimism around the company’s pipeline, including its Alzheimer’s treatment – Donanemab – with a peak sales potential of $10 billion. Eli Lilly’s diabetes drugs – Jardiance and Synjardy – were recently approved to treat type 2 diabetes in children, expanding their market size.
Investors are now eyeing Eli Lilly’s new obesity drug – Retatrutide – which recently showed weight loss of 24% after 48 weeks, marking the best results so far for any obesity drug. The company is awaiting approval for another obesity drug – Mounjaro – that targets two obesity-related hormones – GLP-1 and GIP. Retatrutide targets three obesity-related hormones, including glucagon. [1] Eli Lilly’s obesity drugs could garner over $25 billion in peak sales. However, Eli Lilly is not the only one developing obesity drugs. Nova Nordisk was the first to launch weight loss treatments – Wegovy and Ozempic, and Pfizer is also working on a similar drug that targets obesity-related hormones. Pfizer recently announced that it would stop developing one of the obesity experimental drugs – Lotiglipron – which could bode well for Eli Lilly.
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