Shares of Eli Lilly were up nearly 3% in premarket trading on Wednesday after the company provided a revenue and profit forecast for next year that beat analysts’ expectations. The news, which was released during a meeting with investors, focused on better-than-expected volume growth for many of the 10 new medicines the company has launched in the last five years, including diabetes drug Trulicity, psoriasis med Taltz and breast cancer treatment Verzenio.
It’s no surprise investors were relieved. Lilly’s $1.4-billion-a-year erectile dysfunction drug Cialis fell off a patent cliff this year, and the company has been under pressure to prove its newer drugs can make up for the loss. Analysts predict Cialis sales will drop to $55 million a year by 2022.
Lilly told investors to expect 2019 revenues to come in between $25.3 billion and $25.8 billion and adjusted earnings per share to range from $5.90 to $6, not including the company’s stake in the recently spun off Elanco Animal Health unit. Analysts had projected revenues just below $25 billion and EPS of $5.82, according to FactSet.
Lilly also upped its revenue-growth forecast, from 5% on average between 2015 and 2020 to at least 6%. It’s human pharmaceuticals business should grow at least 7% on average, it said.
That was welcome news, considering there were no guarantees that the newer medicines were going to be slam-dunks. Take Taltz, for example. It has been competing with the world’s top-selling drug, AbbVie’s Humira—a fight that will only get tougher when generic versions of the latter drug start to take hold in the market.
In the third quarter, announced in early November, sales of Taltz jumped 74% to $263 million, helping drive Lilly’s overall revenues up 7% to more than $6 billion.
Lilly's ongoing efforts aimed at making Taltz stand out in the market are starting to pay off, too. Earlier this week, the company announced results from a head-to-head study comparing the drug to Humira in psoriatic arthritis patients who had not yet been treated with a biologic. After 24 weeks of treatment, patients on Taltz experienced better relief of joint pain and clearance of skin lesions than did those taking Humira, the company said.
Lilly’s diabetes drugs Trulicity, Basaglar and Jardiance have also contributed to top-line growth of late. Year-over-year sales of the products grew 55%, 38% and 31% in the third quarter respectively.
The company is counting on high-growth markets like oncology and pain to help make up for the loss of Cialis, and it has reported some progress there. Verzenio, part of a new class of cancer drugs that target the CDK 4/6 pathway, is facing tough competition in Pfizer’s Ibrance and Novartis’ Kisqali. Lilly launched its first direct-to-consumer ad in oncology to raise awareness of the drug in April.
More importantly, Lilly grabbed two additional FDA approvals for Verzenio, one for use in combination with an aromatase inhibitor in previously untreated, postmenopausal women with HR-positive, HER2-negative breast cancer, and the other with fulvestrant in patients whose breast cancer progressed after hormone treatment.
During the meeting for investors Wednesday, the company’s chief scientific officer, Daniel Skovronsky, M.D., Ph.D., discussed development plans for several late-stage pipeline assets and new drugs, including its recently launched migraine medicine Emgality. The drug, a once-monthly injection for migraine prevention, was the third entry in a new class of medicines known as CGRP inhibitors, behind Amgen’s Aimovig and Teva's Ajovy.
Lilly has been fighting to get noticed in the emerging and highly competitive migraine market, offering Emgality at no charge for 12 months to patients, for example, and touting positive clinical trial data. In November, Lilly nabbed Breakthrough Therapy Designation for Emgality to prevent cluster headaches after reporting that a phase 3 trial in that indication met its primary endpoint. The company is also in late-stage testing of another migraine drug, lasmiditan, to treat acute headache pain.
Lilly, Skovronsky said in a statement Wednesday, is “on pace to deliver on the company's goal to launch 20 new medicines in 10 years."
That’s not to say the company is free and clear of its challenges, of course. Lilly expects to take a $200 million hit from changes in the Medicare doughnut hole that will go into place next year, the company said during its third-quarter earnings release. And it has faced coverage challenges overseas for Verzenio.
Meanwhile, Lilly continues to make moves towards refocusing its efforts on high-growth human pharmaceuticals. In addition to spinning off Elanco, Lilly is reportedly looking to offload a portfolio of off-patent medicines it sells in China.