Novo Nordisk (NOVO-B.CO and NVO) may lead Eli Lilly (LLY) when it comes to generating revenue from blockbuster glucagon-like peptide 1 (GLP-1) drugs for obesity and diabetes—but Lilly narrowed the gap during the second quarter, winning over investors this past week with results that exceeded expectations.
Lilly finished the second quarter with revenues for its two GLP-1 products based on the same active ingredient tirzepatide—the type 2 diabetes treatment Mounjaro® and obesity drug Zepbound®—beating consensus analyst forecasts by 33% and 42%, respectively, according to Jefferies.
“Thankfully for investors who’ve already seen a volatile pharma earnings season, LLY exceeded expectations,” Akash Tewari, equity analyst with Jefferies, wrote Thursday in a research note.
Mounjaro generated $3.091 billion, more than triple (216%) the $979.7 million in revenue a year earlier, while Zepbound, the newer of the drugs approved just last November, racked up $1.243 billion. Since Zepbound was approved last November, there’s no year-to-year comparison possible, though the drug generated more than double the $517.4 million it made in first quarter revenue.
For the first half of 2024, Mounjaro generated $4.897 billion in revenue, while Zepbound attracted $1.761 billion. By comparison, arch-rival Novo Nordisk’s two GLP-1 drugs containing active ingredient semaglutide still outsold Lilly’s GLP-1 drugs: The type 2 diabetes treatment Ozempic® made DKK 56.685 billion ($8.295 billion), while the obesity drug Wegovy® pulled in DKK 21.036 billion ($3.078 billion).
However, Lilly narrowed the revenue gap considerably during the second quarter, since Wegovy’s DKK 11.659 billion ($1.706 billion) was just 37% ahead of Zepbound’s Q2 revenue—compared with Q1, when Wegovy’s DKK 9.377 billion ($1.372 billion) was more than double Zepbound’s revenue. Ozempic’s DKK 28.875 billion ($4.225 billion) continued to dominate the obesity category with more than triple (240% above) the revenue of Zepbound.
“Encouraging obesity/diabetes newsflow”
“We anticipate encouraging obesity/diabetes newsflow, including wider appreciation of the health benefits of GLP-1s,” David Risinger, CFA, of Leerink Partners and three colleagues wrote Friday in a research note. “We expect strong execution and rising long-term consensus projections to drive stock outperformance.”
Indeed Lilly stock soared 15.5% between Wednesday and Friday, marching from $772.14 to $845.31 Thursday (a 9.5% gain), then to $892.10 (up another 5.5%).
Based on Lilly’s booming GLP-1 sales, the Leerink analysts increased their estimated 2024 worldwide sales forecast for Mounjaro and Zepbound by 22%, from the $15.6 billion shared by the analyst consensus to $19.1 billion. The analysts raised their 2025 estimate by 30%, from $24.7 billion to $32.2 billion.
Lilly too raised its full-year 2024 revenue guidance to investors by roughly 7% or $3 billion, to between $45.4 billion and $46.6 billion, “primarily driven by the strong performance of Mounjaro and Zepbound,” as well as the company’s non-incretin medicines, such as diabetes drugs that are not GLP-1 analogs or dipeptidyl peptidase 4 (DPP-4) inhibitors.
Risinger and colleagues also raised their firm’s 12-month price target on Lilly shares nearly 10%, from $901 to $990. Leerink joined at least five other firms whose analysts this past week responded to Lilly’s rising GLP-1 sales by boosting their price targets:
- B of A Securities (Geoff Meacham, PhD)—Up 12.5%, from $1,000 to $1,125, and maintaining the firm’s “Overweight” rating.
- BMO Capital (Evan Seigerman)—Up 10%, from $1,001 to $1,101, and maintaining the firm’s “Outperform” rating.
- J.P. Morgan (Chris Schott)—Up 5%, from $1,000 to $1,050, and maintaining the firm’s “Overweight” rating.
- Morgan Stanley (Terence Flynn)—Up 2%, from $1,083 to $1,106, and adding a “Top Pick” label while maintaining the firm’s “Overweight” rating.
- Wells Fargo (Mohit Bansal)—Up 14%, from $875 to $1,000, and maintaining the firm’s “Buy” rating.
Sounding caution
Jefferies’ Tewari expressed caution about whether Lilly can maintain its overall growth pace of 53% seen in the first half of this year.
“We continue to like the set up for LLY, though we’re not sure it’ll breakout as strongly vs other pharma[s] as it did in 1H’24 given the string of competitor obesity readouts primed for 2H’24.
Novo Nordisk reported strong sales growth for the first half of 2024, up 24% to DKK 133.409 billion ($19.518 billion) from DKK 107.667 billion ($15.752 billion). Operating profit rose 18% year over year, to DKK 57.78 billion ($8.453 billion) from DKK 48.895 billion ($7.153 billion).
Based on that growth, Novo Nordisk raised its 2024 sales growth guidance or “outlook” to 22-28% at constant exchange rates (CER) or 21–27% reported in Danish kroner, up from 19%-27% at CER and Danish kroner.
“The growth is driven by the increased demand for our GLP-1-based diabetes and obesity treatments, and we continue to reach more patients with our innovative treatments,” Novo Nordisk president and CEO Lars Fruergaard Jørgensen said in a statement.
Below estimate
But as Puru Gaur, senior commercial analyst with Norstella, observed in a research note, Novo Nordisk’s Q2 sales of DKK 68.06 billion DKK (about $9.88 billion) fell 1.36% short of the firm’s estimate—resulting in mixed results “primarily due to supply challenges and intensifying competition in the booming obesity medicine field,” as a series of potential competitors take aim at Novo Nordisk and Lilly, including Amgen’s MariTide and Viking Therapeutics’ VK2735.
Gaur also noted that Novo Nordisk decreased its operating profit forecast for this year to between 20–28% at CER or 19–26% in Danish kroner, from 22% to 30% (CER and kroner), due to ongoing supply chain issues and competitive pressures.
Add those factors to the narrowing gap with Lilly on GLP-1 drug sales, and it explains why investors were less bullish on Novo Nordisk shares this past week than Lilly shares.
Novo Nordisk shares yo-yoed and ultimately rose 3%—but not before they slipped 7% Wednesday when the company announced its results, from DKK 888.00 ($129.92) to DKK 828.40 ($121.20). Shares rebounded 4% the following day, however, to an even DKK 864.00 ($126.41) and climbed another 6% Friday to DKK 918.60 ($134.39).
Both Novo Nordisk and Lilly have responded to demand for their GLP-1 drugs outpacing supply by building and/or buying new facilities worldwide—such as Novo Nordisk’s planned $4.1 billion second fill/finish site in Clayton, NC.
In February, Novo Nordisk agreed to buy three fill-finish sites from Catalent for $11 billion upfront as part of a deal in which Novo Holdings, the asset manager of the foundation that controls Novo Nordisk, agreed to acquire the contract development and manufacturing organization (CDMO) for $16.5 billion.
Lilly announced plans in May to expand its manufacturing site roughly 30 miles northwest of its Indianapolis headquarters in Lebanon, IN, by building a $5.3 billion plant designed to produce API for Mounjaro and Zepbound. Lilly has committed more than $16 billion toward building new manufacturing sites in the United States and Europe, in sites that include North Carolina’s Research Triangle Park and Concord, NC, as well as Limerick, Ireland, and Alzey, Germany.
Leaders & laggards
- Actinium Pharmaceuticals (ATNM) shares plunged 60% from $6.17 to $2.48 August 5 after the company acknowledged the FDA’s finding that the Phase III SIERRA trial (NCT02665065) was not adequate to support a biologics license application (BLA) filing for Iomab-B despite meeting the study’s primary endpoint of durable complete remission with statistical significance and achieving positive secondary endpoints including event free survival and safety. The FDA directed the company to demonstrate an overall survival benefit in a randomized head-to-head trial. Iomab-B is a first-in-class targeted radiotherapy intended to improve patient access to potentially curative bone marrow transplant by simultaneously and rapidly depleting blood cancer, immune, and bone marrow stem cells that uniquely express CD45. Actinium said it will seek a strategic partner to continue developing Iomab-B in the U.S. following completion of its FDA interactions, and will focus development efforts on its Actimab-A, Iomab-ACT and preclinical programs.
- AN2 Therapeutics (ANTX) shares plummeted 61% from $2.64 to $1.03 Friday after the company announced it would begin a strategic restructuring and terminate the Phase II and Phase III portions of the EBO-301 trial (NCT05327803) assessing epetraborole plus an optimized background regimen (OBR) in treatment-refractory MAC lung disease. Epetraborole failed a key secondary endpoint of the study, sputum culture conversion at Month 6, by showing similarity between treatment arms (13.2% in epetraborole + OBR vs. 10.0% placebo + OBR). AN2 added that EBO-301 met its primary objective of demonstrating the potential validation of a novel patient-reported outcome (PRO) tool and a higher PRO-based clinical response rate in the epetraborole + OBR arm (39.5%) vs. placebo + OBR (25.0%).
- G1 Therapeutics (GTHX) shares soared 66% from $4.25 TO $7.06 Wednesday after the company announced it agreed to be acquired by Holbaek, Denmark-based Pharmacosmos Group for approximately $405 million. The deal is designed to combine Pharmacosmos’ expertise in hematology and supportive care with G1’s Cosela (trilaciclib), a treatment for extensive stage small cell lung cancer (ES-SCLC). In addition to expanding Cosela’s use in the U.S. and China, the only countries where the drug is approved, the combined company aims to pursuing approvals overseas to attract more lung cancer patients suffering from myelosuppression after chemotherapy. The boards of both companies unanimously approved the deal, which is expected to close late in the third quarter.
- Sangamo Therapeutics (SGMO) shares jumped 29% from 77 cents to 99 cents Tuesday, after the company said it granted Genentech, a member of the Roche Group an exclusive license to Sangamo’s proprietary zinc finger repressors directed to the tau gene, as well as an undisclosed second neurology target. Sangamo also agreed to exclusively license to Genentech a neurotropic adeno-associated virus (AAV) capsid, STAC-BBB, directed at tau and the second neurology target. Roche agreed to pay Sangamo $50 million in near-term upfront license fees and milestone payment, and up to $1.9 billion in payments tied to achieving development and commercial milestones across multiple medicines, as well as tiered royalties on net sales. Sangamo said STAC-BBB has shown potent blood-brain barrier penetration and brain transduction in nonhuman primates.
