On Tuesday, Deutsche Bank (ETR:DBKGn) maintained a Hold rating for Eli Lilly and Company (NYSE:LLY) with a price target of $695.00. The stance comes after considering recent Phase 2 trial data from Viking Therapeutics (NASDAQ:VKTX), which suggests the GLP1 market competition could expand beyond the current Eli Lilly and Novo Nordisk (NYSE:NVO) duopoly. The data revealed Viking Therapeutics' investigational drug VK2735 led to significant weight loss in obese patients over a 13-week period.
The trial results for VK2735, a dual GLP-1 x GIP agonist, indicated up to approximately 13% weight loss without signs of plateauing, potentially challenging Eli Lilly's and Novo Nordisk's market position. Despite these findings, the Deutsche Bank analyst underscored the complexities of manufacturing these therapies at scale, which has historically provided Eli Lilly and Novo Nordisk with a competitive edge.
In comparison to Eli Lilly and Novo Nordisk's treatments, VK2735's 15mg once-weekly dose demonstrated a faster pace of weight loss, with a 17% nausea rate that is lower than the 30-45% typically associated with Eli Lilly's and Novo's options. However, VK2735 showed a higher vomiting rate of 63% and a discontinuation rate of 20%, which is more than the 10-20% vomiting and 6-16% discontinuation rates seen with Eli Lilly and Novo Nordisk's treatments.
The analysis also touched on the performance of VK2735 against AMG133, noting that while VK2735's weight loss pace was slightly below that of AMG133, there is a keen interest in VK2735's impact on free fatty acids and lipid parameters. This interest is particularly in light of a publication in Nature that suggested GIP antagonism might counter the benefits of GLP-1 x GIP dual agonism.
Eli Lilly's stock rating and price target remain unchanged despite the potential increase in market competition. The analysis highlights the importance of manufacturing capabilities and the complex dynamics of the GLP1 market as new data emerges.
InvestingPro Insights
Eli Lilly and Company (NYSE:LLY) remains a formidable player in the pharmaceutical industry, with several factors supporting its market position. According to InvestingPro Tips, Eli Lilly has demonstrated a consistent ability to reward shareholders, having raised its dividend for 9 consecutive years and maintained dividend payments for an impressive 54 consecutive years. Furthermore, the company's net income is expected to grow this year, and 4 analysts have recently revised their earnings estimates upwards for the upcoming period, indicating a positive outlook on the company's financial performance.
From a financial standpoint, the InvestingPro Data reveals a robust picture. Eli Lilly boasts a substantial market capitalization of $694.85 billion USD, reflecting its significant presence in the market. The company has experienced a considerable revenue growth of 19.56% over the last twelve months as of Q1 2023, with a gross profit margin of 79.25%, underscoring its operational efficiency. Additionally, Eli Lilly's operating income margin stands at 31.61%, highlighting its ability to translate sales into profit effectively.
Investors considering Eli Lilly should note the company's current P/E Ratio, which is at 132.47, suggesting a high valuation multiple. However, this metric should be viewed in the context of the company's overall financial health and industry position. For those seeking more comprehensive analysis and additional InvestingPro Tips, including insights on the company's valuation multiples and stock volatility, visit https://www.investing.com/pro/LLY. There are 22 more tips available on InvestingPro, offering a deeper dive into Eli Lilly's financial health and market standing. To access these insights and more, use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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