Eli Lilly shares take a hit as company lowers full-year forecast
The rollout of Covid-19 vaccines and the decision to halt distribution of its antibody therapy has left Eli Lilly with some disappointing news to share.
On Tuesday, the company reported that it missed analysts’ expectations for Q1 profits and cut the top end of its full-year forecast by about $400 million. As a result, its stock $LLY dipped about 3.38% on Tuesday morning, pricing in around $180 per share.
CFO Anat Ashkenazi said on the earnings call that while Lilly once expected to pull in between $1 billion and $2 billion from its Covid-19 antibodies in 2021, it’s now narrowing that range to $1 billion to $1.5 billion, based on the rollout of vaccines, current utilization rate and supply, and the decision to halt the distribution of bamlanivimab, its monoclonal antibody that was authorized for emergency use back in November.
Last month, the US slammed the brakes on the use of bamlanivimab in three states due to the prevalence of a variant that isn’t susceptible to the monoclonal antibody. Earlier this week, the US government and Eli Lilly agreed to drop all use of the antibody as a single therapy, due to the “sustained increase” of variants. All treatment delivery sites will still be able to order Lilly’s combo Covid-19 treatment of bamlanivimab and etesevimab, the FDA said.
The US ended its purchase agreement for bamlanivimab alone and canceled the remaining 350,856 doses that were scheduled to be delivered by the end of last month. At a cost of $1,250 per dose of bamlanivimab, which Lilly announced in October 2020, the ending of that purchase agreement will cost the company about $440 million.
Those changes led Lilly to cut the top end of its total revenue forecast for 2021 from $28 billion to $27.6 billion. The company ended up with quarterly earnings of $1.87 per share, missing Zacks Investment Research’s consensus estimate of $2.12 per share. Total Q1 revenue for the company’s Covid-19 antibodies totaled $650.6 million in the US, and $159.5 million outside the US.
Looking beyond that, CEO Dave Ricks attempted to paint a picture of a “a strong and growing core business” during the earnings call.
Overall, Lilly saw a revenue growth of 16% compared to Q1 2020, or about 7% for the core business, excluding revenue from its Covid-19 antibodies and $250 million in Q1 2020 revenue from “increased customer buying patterns and patient prescription trends.”
Nearly half of Lilly’s total revenue for the quarter (46%) came from the company’s key growth products: Trulicity, Verzenio, Olumiant, Tyvyt, Emgality, Jardiance, Retevmo, Cyramza and Taltz. Trulicity, Lilly’s therapy for adults with type 2 diabetes mellitus, brought in a total of $1.45 billion — an 18% increase compared to Q1 2020.
Sales for Humulin, Jardiance, Verzenio, Cyramza, Olumiant, Emgality and Tyvyt also saw an increase this quarter. But that success was matched with dips in revenue from Humalog, Taltz, Basaglar and Forteo.
We recognize this quarter was noisy, catching the increased consumer stocking from the Q1 2020 in our quarterly compare and increased Covid-19 therapy R&D spend in 2021. These items coupled with the FX rate movement, and a number of changes to US government purchase agreements for Covid-19 antibodies throughout the quarter make for a longer earnings call, and press release, and we realize for those keeping score on sell side model accuracy, perhaps some disappointment.