We are working our way through the 8th season of our "Pipelines Unplugged" conference call series where we interview senior R&D leadership teams from the 10 US/EU global pharmaceutical companies we cover in a "fireside chat" format.
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LLY reported good Q1 results but with a clear boost from COVID-19 (C19) front-loading. The company made sure investors know there is uncertainty going forward on various C19-related fronts, such as a negative payer mix with certain products, an uncertain rate of uptake of brands, and some pausing in clinical trials. That said, it affirmed almost all elements of prior financial guidance (and in fact raised the midpoint of FY EPS guidance modestly). Most of the Q&A during its conference call with analysts reflected an effort to tease out more specifics on the potential negative impact of C19, but LLY deviated little from what was said in prepared remarks.
LLY reported good Q1 results but with a clear boost from COVID-19 (C19) front-loading. The company made sure investors know there is uncertainty going forward on various C19-related fronts, such as a negative payer mix with certain products, an uncertain rate of uptake of brands, and some pausing in clinical trials. That said, it affirmed almost all elements of prior financial guidance (and in fact raised the midpoint of FY EPS guidance modestly). Most of the Q&A during its conference call with analysts reflected an effort to tease out more specifics on the potential negative impact of C19, but LLY deviated little from what was said in prepared remarks. Apart from C19, in general, LLY’s business continues to perform well as the company remains in a new drug launch phase, able to post higher growth than most peers. Shares have benefitted from a recent “flight to quality” along with certain other large cap, growthier biopharma companies, raising the question about how much more upside there is and whether LLY is becoming too crowded on the long side. In terms of event flow in 2020, the event of greatest importance in our view is likely to be the release of the first ph3 results from tirzepatide (GIP/GLP), but the amount of information may be limited as this is only likely to be a “top line” set of findings; also, it will only be the first of many ph3 trial reporting out, and it will be the totality of these trials that better defines the product’s future (for which investor expectations are already quite high). While LLY has a portfolio of Alzheimer’s disease assets that makes it a derivative play on Biogen (BIIB; we rate Peer Perform), in terms of news flow specific to LLY in 2020, it is likely to be minimal – its most advanced program (apart from sola in the A4 trial) is donanemab/N3PG, a aducanumab (BIIB) look-alike, but top-line results may not actually come until very early 2021. We rate LLY as Peer Perform.
Eli Lilly (LLY) announced 1Q20 financial results this morning (04/23/20) – beat on both revenues and EPS. Revenues of $5.9B vs. consensus of $5.45B and our $5.53B. EPS of $1.75, vs. consensus of $1.46 and our $1.50. Clearly, the biggest driver was ~$250M of COVID-related front-loading across several products, both US and ex-US. EPS also partly boosted by lower than expected tax rate of 13.6% (vs. our 15.6%).
The Q1 2020 earnings season for our 14 covered names (US pharma, EU pharma, large cap biotech) is about to begin. It starts Wednesday, April 22nd with Biogen and Roche and ends Thursday, May 7th with Bristol-Myers Squibb. This report contains our updated forecasts and perspectives.
We are initiating coverage of 4 large cap biotech stocks. This will supplement our existing coverage of 10 US/EU large cap global pharmaceutical companies.
• If you have not seen these before, we have been publishing them for the last 7y now.
• We provide some high-level sector perspective with various comparative analyses (see Exhibit 4 below, as one example) and also discuss the bull/bear case, current controversies, the near-/long-term view, updated pipeline perspectives, and more for each of the 10 US/EU global pharmaceutical names we cover.
• It is very up-to-date on what matters with each name, recounting recent events and looking forward at what's ahead.
In almost every presentation showing latest COVID-19 data we’ve seen – in the media, in analyst notes, and elsewhere – what is shown are absolute numbers.
We track Emerging Markets growth rates for our covered companies. It has accelerated consistently since mid-2016…except for Q4 which likely feels the pinch from China’s volume-based procurement (VBP) program. One has to wonder what Q1-2020 will look like, between VBP and COVID-19 (coronavirus).
On Thursday (1/30) before the market open, LLY reported Q4 financial results. It was a solid, largely quiet, quarter (other than disclosure on the conference call that ph 2 immuno-oncology pipeline drug, pegilodecakin, has now also failed in lung cancer, so it is essentially dead; this was not in the press release this morning; we have viewed the product as high risk but one that offered asymmetric upside optionality as a potential novel IO agent; LLY paid $1.6B for this product in 2018). The company made only small updates to its 2020 financial guidance first given in Dec-19 - we had assumed there may be some slight dilution to EPS from the recent DERM acquisition but this did not happen. While LLY’s biggest area of revenue concentration is diabetes (~50%) of total top line sales, perhaps more top of mind for investors is the company’s Alzheimer’s disease platform which spans several molecules and asset classes.
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