Eli Lilly had some dreary Q2 numbers to report Thursday. And they kept analysts and investors on hold for an hour before attempting an explanation, blaming the delay on outside tech issues.
The late Q2 call didn’t help make the top and bottom line look any better. Sales dropped to $6.49 billion for the quarter, a bad miss from the $6.85 billion consensus. According to Lilly, that was due to both lower prices for some products — insulin was the standout — as well as a foreign exchange hit as a strong dollar bites and a drop of 13% on Covid-19 revenue.
Alimta generics also began to carve into revenue.
As a result, Lilly dropped their guidance on adjusted earnings for 2022 downward by 25 cents a share, something investors always hate to see. And Lilly was punished for it, with its stock price taking a 3%-plus hit early in the day.
Ahead of the call, Lilly announced that the FDA had accepted the donanemab filing for Alzheimer’s, ready to provide a fast assessment under priority review as the pharma giant sought an accelerated approval with biomarker data, ahead of a Phase III efficacy readout. And neuroscience chief Anne White said during the call that they were committed to seeing it through, even though the decision by Medicare to restrict coverage on Aduhelm — and any other essentially experimental drugs — would confine access to a “very limited” group of patients.
Like every other Big Pharma CEO, David Ricks endorsed the cap on out-of-pocket drug costs for Medicare members. But drug pricing rules — which are anathema in the pharma world, when tied to mandated pricing — came in for criticism.
Echoing a remark by AbbVie CEO Rick Gonzalez, Ricks essentially said that the new rules as proposed now would shift R&D resources out of small molecules and into biologics, which are better protected.
Here’s Ricks:
The negotiation piece is a problem. I think in the short term it doesn’t do much; they don’t really start until ’26 anyway… Probably to me the most damaging thing about it is that it sends a signal to investors and capital allocators like us that small molecules and particularly small molecules in diseases that require stepwise development, like cancer, where we start in later stages and work our way to adjuvant or even in some orphan conditions, really aren’t wanted and are worth a lot less. So we’ll focus our resources on other areas of innovation, we have plenty of those, and so will the rest of the sector. And I think that’s a miss for the patients that probably want better oral cancer drugs in the future.
Lilly set the stage for the awkward H1 call on Wednesday evening, announcing that as federal supplies of its Covid-19 antibody dwindle with no funds available for any new contracts ahead, they’ll shift over to commercial sales. Now states and hospitals will be able to order bebtelovimab through a sole distributor.
One of the bright spots at Lilly was on the dual GIP/GLP-1 receptor agonist Mounjaro (tirzepatide) front, which got a green light for diabetes a few months ago. Expectations are running high that Lilly can make this one into a major new drug franchise, particularly if they can get approved to market it for obesity.
David Risinger of SVB Securities was happy.
Sales were $16mm vs. SVBS’s $10mm and cons’ $12mm; we assume upside was due to initial channel fill. Lilly indicated that it expects to have sufficient supply for launch, which is important in light of Novo Nordisk’s (Not Rated) Wegovy production challenges.
The spotlight now shifts to the regulatory plan on obesity as they pursue other indications in the clinic, much like Novo Nordisk is doing with Wegovy (semaglutide). Lilly is setting up a head-to-head study with Novo’s drug on obesity, but today there’s still no timeline available on that score.
