Lilly narrows annual guidance as Q1 sales fall short

Headline results for the first quarter:

  • Revenue: $6.8 billion (forecasts of $7 billion), up 16%
  • Profit: $1.4 billion, down 7%

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

What the company said:

"Our key growth products gained volume and share…and represented over half of our core business," remarked CEO David Ricks, while also highlighting a "remarkable" R&D quarter with key readouts for mirikizumab in ulcerative colitis, donanemab in Alzheimer's disease, tirzepatide in diabetes, and baricitinib in alopecia areata.

Ricks noted that Eli Lilly delivered "hundreds of thousands" of doses of its COVID-19 antibodies to patients. The company took steps to transition to supply bamlanivimab and etesevimab for administration together, rather than bamlanivimab as a standalone treatment, which saw its FDA emergency-use authorisation revoked earlier this month on concerns that new SARS-CoV-2 variants could be resistant to it.

Eli Lilly noted that its first-quarter revenue grew at a more modest 7% if it excludes the $810.1 million (forecasts of $985 million) it generated from COVID-19 antibodies, as well as the roughly $250 million it recorded in early 2020 as the start of the pandemic drove up customer buying patterns and prescription trends.

Other results:

  • US revenue: $3.9 billion, up 18%, although sales were down 1% excluding COVID-19 antibodies, reflecting the impact of customer buying patterns and patient prescription trends due to the pandemic
  • Non-US revenue: $2.9 billion, up 13%, impacted by volume gains for Alimta, partially offset by decreased volumes for certain products, as well as lower realised prices for Trulicity, Olumiant and Forteo
  • Key growth products launched since 2014:
    • Trulicity: $1.5 billion, up 18%, with sales of $1.1 billion in the US driven by increased demand, but offset by lower realised prices
    • Taltz: $403.2 million, down 9%, as increased rebates to gain commercial access in the US led to lower realised prices
    • Jardiance: $312 million, up 17%, with ex-US revenues jumping 31% because of volume gains, but helped by favourable exchange rates as well
    • Verzenio: $269 million, up 43%, with demand driving sales 34% higher in the US, while volumes boosted ex-US revenue 64%
    • Basaglar: $246.6 million, down 19%, with competitive pressures plus lower realised prices knocking US sales by 24%
    • Cyramza: $240.5 million, up 1%
    • Olumiant: $193.8 million, up 39%, with sales in the US and outside the US climbing 39% and 32%, respectively
    • Emgality: $119.5 million, up 61%, boosted by 51% higher sales in the US driven by higher realised prices
  • Humalog: $617 million, down 11%, as higher contracted rebates drove down realised prices in the US
  • Alimta: $559 million, flat versus the prior year, with volume declines expected in the second half due to the loss of patent exclusivity in Japan and Europe likely to bring generic competition to those markets
  • Humulin: $321.7 million, up 2%
  • Forteo: $198.5 million, down 27%, with volume expected to decline further as a result of anticipated generic and biosimilar competition due to the loss of patent exclusivity in the US, Japan and major European markets

Looking ahead:

Eli Lilly now expects revenue for 2021 to be between $26.6 billion and $27.6 billion, narrowed from a prior range of $26.5 billion to $28 billion. The company explained that the revision reflects lower-than-expected sales of COVID-19 therapies due to decreased demand, with annual revenue from these products forecast to be between $1 billion and $1.5 billion, with the top end cut from $2 billion projected previously. "COVID-19 therapies are reducing in their need as the virus is being arrested by vaccines in the US," noted Ricks.

Earnings per share are seen in the range of $7.80 to $8.00, narrowed from an earlier prediction of between $7.75 and $8.40. Analysts, meanwhile, are projecting adjusted profit of $8.25 per share on $27.7 billion in sales this year.

What analysts said:

Mizuho Securities analyst Vamil Divan remarked "we assumed lower sales of COVID-19 antibodies would impact the quarter and guidance...but the extent of the miss, especially for important products such as Taltz and Verzenio, is surprising to us." Meanwhile, Ashtyn Evans of Edward Jones said "this was a disappointing quarter for Lilly compared with expectations," adding that "much of the lowered guidance was due to COVID-19 impacts."

Pipeline updates:

Eli Lilly said that while the OASIS programme generated positive results for mirikizumab with safety and efficacy similar to other IL-23p19s, the company no longer plans to submit the drug for regulatory approval in psoriasis in any geography, focusing instead on the ulcerative colitis and Crohn's disease indications.

It is also scrapping further development on a CD73 inhibitor that was in Phase I testing for cancer, as well as an early-stage ANGPTL3/8 monoclonal antibody being evaluated as a potential treatment for cardiovascular disease.

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