Alzheimer's Drug Win, But No Stock Soar for Lilly?
Despite FDA's nod to $Eli Lilly(LLY)$'s Kisunla for treating early symptomatic Alzheimer's, a blockbuster with potential annual peak sales of $5 billion, the stock surprisingly didn't take flight. Why the lull?
The Good News Was Already Baked In
The simple truth: Lilly's share price had already factored in the FDA approval. A rejection would've likely tanked the stock.
A month ago, the FDA's advisory panel unanimously recommended approval, citing the drug's benefits outweighing risks. Plus, donanemab's performance in earlier trials mirrored Biogen's Leqembi, which gained approval last year.
These were clear signs Kisunla's approval was all but certain. It's a classic case of "buy the rumor, sell the news" for Lilly shares, evidenced by their slight dip post-approval.
GLP-1 Drugs Stealing the Spotlight
What's more, Lilly's stock doubled over the past year, fueled mainly by its weight loss prospects, not Alzheimer's drugs or solid financials.
Its GLP-1 portfolio, including Zepbound for weight loss and Mounjaro for diabetes, are the real game-changers, projected to peak at $50 billion annually. GLP-1 drugs, past and future, are the real drivers behind Lilly's share price.
Long-Term Potential Remains Intact
Kisunla's FDA approval without a significant stock jump doesn't signal the end of Lilly's rally. With capacity expansion, there's more room for growth.
Despite a P/E ratio over 130, given the company's rapid revenue and profit projections, now could still be a sweet spot for long-term investors to jump in.
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