Eli Lilly smashed Wall Street projections thanks to its diabetes drugs

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Happy Thursday, readers.

Shares of Indianapolis-based drug giant Eli Lilly rose 2% in Thursday trading following a bullish earnings report that bested Wall Street expectations. (And a 2% increase is no mean feat for a company with a market valuation of $135 billion.)

Lilly was lifted by strong sales numbers from its flagship diabetes drugs. It’s a big win for the company as it attempts to fight back fierce competition in the sector from generics with new diabetes drug launches and higher sales volume.

The earnings report for the fourth quarter of 2019 included news of $6.1 billion in revenues, an 8% year-over-year increase and $200 million over consensus Wall Street expectations. The truly bullish signal in the earnings report is the company’s expanding reach across the U.S. Patient pool—the number of people using Lilly medicines spiked by nearly 10%, making up for an overall drop in list prices for the firm’s drugs.

Trulicity and Jardiance, two of Lilly’s key drugs for type 2 diabetes, were some of the company’s biggest sellers in the fourth quarter.

But there may be another factor fueling the investor bullishness: Lilly executives’ decision to nix a trio of experimental cancer assets that they didn’t think were worth a financial risk. It’s likely a lasting lesson from the financially painful experience the firm suffered from its big bet on an experimental Alzheimer’s drug, which it abandoned between 2016 and 2018. That project cost Lilly more than $150 million.

In addition to this apparent “fail faster” philosophy, which gives biopharma companies an out before they’ve invested too much in a risky product, overall sales volume growth seems to be fueling investor confidence. Lilly’s shares are up more than 8.5% year-to-date compared with a relatively flat NYSE composite. Over the past 12 months, Lilly stock is up more than 23% compared with about 14% for the NYSE composite.

Read on for the day’s news.

Sy Mukherjee
[email protected]
@the_sy_guy

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