Lilly expects strong 2024 profit on rising weight-loss drug demand

Eli Lilly on Tuesday forecast 2024 profit above Wall Street estimates on soaring demand for its recently approved weight-loss drug, and said the treatment helped reduce symptoms of a common, difficult to treat fatty liver disease in a mid-stage trial.

Eli Lilly on Tuesday forecast 2024 profit above Wall Street estimates on soaring demand for its recently approved weight-loss drug, and said the treatment helped reduce symptoms of a common, difficult to treat fatty liver disease in a mid-stage trial. Sales of obesity drug Zepbound reached $175.8 million in the first few weeks of its launch in early December, after it was approved by the U.S. Food and Drug Administration in November.

Shares of the Indianapolis-based drugmaker jumped nearly 5% in premarket trading after gaining about 11% in January, making Lilly the eighth largest company in the U.S. by market capitalization and most valuable healthcare company. "I guess, (I was) most surprised by the sales of Zepbound. I wouldn't have expected near that much," said Troy Harmon, Chief Investment Officer at Henssler Financial.

Lilly said it will expand its manufacturing, but given the time required to bring new capacity fully online, it expects demand for its diabetes and obesity drugs Mounjaro and Zepbound to outpace supply in 2024. Lilly and its main rival in the obesity market, Novo Nordisk , are both testing their treatments for other health benefits such as obstructive sleep apnea and chronic kidney disease to secure wider coverage for the medicines.

Explosive demand for Mounjaro, which had also been used off label for weight loss, and now Zepbound, has led to a buying spree of Lilly's stock, propelling the drugmaker's market value to over $600 billion. The drugmaker said tirzepatide, the active ingredient in Zepbound and Mounjaro, also met the main goal in a study for a type of fatty liver disease now called metabolic dysfunction-associated steatohepatitis, or MASH.

Lilly said the drug helped up to 74% of patients achieve absence of the disease with no worsening of liver scarring at 52 weeks, compared to 13% of patients on placebo. It provided no further details but a clinical trials database said patients in the study had stage 2 or 3 fibrosis. The company has been investing in manufacturing facilities in the U.S. and Europe to ramp up supply of tirzepatide, announcing in November it would build its first plant in Germany for 2.3 billion euros ($2.47 billion).

Lilly said it expects adjusted 2024 earnings of $12.20 to $12.70 per share. That puts the midpoint just ahead of analysts' estimates of $12.43 per share, according to LSEG data. Lilly reported sales of Mounjaro for the quarter rose to $2.21 billion from $279.2 million last year, easily outpacing expectations of $1.8 billion, according to BMO Capital Markets.

Fourth-quarter profit of $2.49 per share on an adjusted basis, beat Wall Street expectations by 27 cents.