Eli Lilly's stock jumps as first-quarter profit tops estimates amid strong sales of Mounjaro, Zepbound

By Eleanor Laise

Drugmaker boosts full-year sales and profit guidance, but supply worries remain in focus

Eli Lilly & Co. shares gained 4.5% Tuesday morning after the company reported first-quarter profit that topped analyst expectations amid strong sales of diabetes drug Mounjaro and weight-loss treatment Zepbound.

The drugmaker reported net income of $2.243 billion, or $2.48 per share, up from $1.345 billion, or $1.49 per share, in the year-earlier period. Adjusted earnings per share came to $2.58 in the quarter, up from $1.62 a year earlier and beating the FactSet consensus of $2.47. First-quarter revenues totaled $8.768 billion, up 26% from a year earlier but below the FactSet consensus of $8.935 billion.

Mounjaro generated sales of $1.806 billion in the quarter, up from $569 million a year earlier, while Zepbound, which was approved by the FDA late last year, posted sales of $517 million.

Lilly's revenue miss in the quarter "reflects a lack of capacity, rather than a problem with Lilly product demand," BMO Capital Markets analyst Evan David Seigerman said in a note Tuesday.

Ongoing shortages of tirzepatide, the active ingredient in Mounjaro and Zepbound, could make Lilly shares choppy in the short term, some analysts say. All but the lowest dose of Mounjaro and Zepbound injections now have limited availability through the second quarter of this year, according to the Food and Drug Administration's drug-shortage database.

Lilly Chief Executive David Ricks said in a statement Tuesday that the company is "rapidly expanding manufacturing capacity to make our incretin medicines available to more patients." This year's most significant production increases are expected in the second half, the company said.

In its earnings presentation, Lilly was upbeat about insurance coverage of Zepbound. The company said it is working to broaden access on formularies, or lists of covered drugs, and sees "encouraging" early progress in employers opting in to cover the drug.

In light of recently released late-stage trial data showing Zepbound's potential as a treatment of obstructive sleep apnea, Lilly is confident that the drug will ultimately be covered for that use in Medicare's Part D prescription-drug program, Patrik Jonsson, head of Lilly's diabetes and obesity business, said on a call with analysts Tuesday.

Breast-cancer treatment Verzenio generated $1.05 billion in sales in the quarter, up 40% from a year earlier, but fell short of the FactSet consensus of $1.127 billion.

Sales of diabetes drug Jardiance climbed 19%, to $687 million, but sales of Trulicity, another top-selling diabetes treatment, dropped 26%, to $1.456 billion, amid supply constraints and competitive dynamics, Lilly said.

The Food and Drug Administration advisory committee meeting on donanemab, Lilly's experimental Alzheimer's treatment, is expected to take place toward the middle of this year, although an exact date has not yet been confirmed, Lilly's chief scientific officer Daniel Skovronsky said on the call Tuesday. The advisory committee is likely to focus on donanemab's efficacy and safety profile, Skovronsky said, adding, "we remain confident in donanemab's potential to offer very meaningful benefits to patients."

Lilly raised its full-year 2024 sales and profit guidance. The company now expects 2024 sales in the range of $42.4 billion to $43.6 billion, and adjusted earnings per share in the range of $13.50 to $14.00.

The full-year revenue guidance boost represents a key vote of confidence that greater supply of incretin medicines like Zepbound will come back online in the second half of this year, Jefferies analysts said in a note Tuesday.

Lilly shares (LLY) have gained 32% in the year to date, while the S&P 500 is up 6.4%.

-Eleanor Laise

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04-30-24 1144ET

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