Eli Lilly's fourth-quarter sales top forecasts, with profit jumping 33%

Headline results for the fourth quarter:

Revenue

$6.1 billion (forecasts of $5.9 billion)

+8%

Profit

$1.5 billion

+33%

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"The combination of strong revenue growth from our newer medicines and prudent expense control across our business enabled Eli Lilly to invest more in our R&D pipeline and still deliver impressive earnings growth in the fourth quarter and full-year 2019," commented CEO David Ricks.

Other results:

  • US revenue: $3.5 billion, up 7%
  • Non-US revenue: $2.6 billion, up 10%
  • Key growth products launched since 2014:
    • Trulicity: $1.2 billion, up 31%, edging past forecasts of $1.15 billion, with US revenues, which were up 29% to $942 million, partially offset by lower realised prices
    • Taltz: $420.1 million, up 37%, beating estimates of $395.8 million, driven by increased demand in the US and higher volume from recent launches outside the country
    • Basaglar: $307.2 million, up 32%, boosted by higher realised prices and, to a lesser extent, increased demand
    • Jardiance: $268 million, up 39%, with US and non-US sales jumping 36% and 42%, respectively
    • Cyramza: $245.1 million, up 11%, primarily due to increased demand in the US and higher volumes outside the country
    • Verzenio: $179.1 million, up from $83.1 million in the prior year, fueled by greater demand in the US
    • Olumiant: $127.8 million, up 82%, with ex-US sales driven by increased demand, partially offset by lower realised prices and currency effects
    • Emgality: $66.3 million, up from $4.9 million in the prior year
  • Humalog: $763.4 million, down 1%, but above expectations of $710.8 million, with higher volume and higher realised prices driving US sales, while volumes declined outside the country
  • Alimta: $530.7 million, down 5%, US sales dipped 1% as a result of lower realised prices due to changes in estimates for rebates and discounts, partially offset by demand
  • Forteo: $360.2 million, down 18%, hurt by lower demand and volume in and outside the US
  • Humulin: $348 million, up 3%, boosted by increased volumes, as well as higher realised prices in the US due to changes in estimates for rebates and discounts
  • Cialis: $197.8 million, down 44%, but surpassing forecasts of $175 million
  • Full-year revenue: $22.3 billion, up 4%
  • Full-year profit: $8.3 billion, versus $3.2 billion in the prior year

Looking ahead:   

Eli Lilly now expects revenue this year of between $23.7 billion and $24.2 billion, lifted from prior guidance of $23.6 billion to $24.1 billion. Meanwhile, earnings per share are still forecast to be in the range of $6.70 to $6.80, with analysts predicting earnings of $6.71 per share.

The company said revenue growth is still expected to be driven by key products including Trulicity, Taltz, Basaglar, Jardiance, Verzenio, Cyramza, Olumiant, Emgality and Baqsimi, as well as the expected launch of Reyvow, which US regulators recently cleared for the acute treatment of migraine. The drugmaker added that growth could also benefit from the addition of Qbrexza, a medicated cloth for the topical treatment of primary axillary hyperhidrosis, that will come with its pending $1.1-billion acquisition of Dermira.

What analysts said:

Cantor Fitzgerald analyst Louise Chen said "Eli Lilly is blooming this morning" following its quarterly results report, noting that strong revenue from newer medicines as well as cost controls helped the drugmaker to invest in the business and still deliver earnings growth.

Analyst Navin Jacob of UBS remarked that "with Trulicity and Taltz looking very strong relative to expectations, and growth not being dampened by any competition or pricing, that's more the focus for investors." Meanwhile, Citi analyst Andrew Baum suggested that Eli Lilly's performance in the quarter is also likely to ease investors' "exaggerated concerns" over the launch of Novo Nordisk's Rybelsus, which was approved last September by the FDA as the first oral GLP-1 receptor agonist for type 2 diabetes. 

Pipeline updates:

Eli Lilly disclosed that it halted Phase II development of the experimentalTGF-beta R1 kinase inhibitor galunisertib in cancer, as well as early-stage work on an IDO1 inhibitor and TIM-3 monoclonal antibody.

The company also indicated Thursday that it is not planning further studies of the experimental immunotherapy pegilodecakin due to disappointing trial results. Last year, a Phase III studyl of the long-acting PEGylated form of IL-10, which Eli Lilly gained via its $1.6-billion purchase of ARMO BioSciences, in patients with pancreatic cancer failed to meet its primary endpoint of overall survival.

Chief scientific officer Daniel Skovronsky said that although the company will continue to pursue "higher-risk, high reward" drugs such as pegilodecakin, these will be a smaller part of the portfolio in the future.

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