August 25, 2023 | 08:52 ET~
Eli Lilly
LLY-NYSE
Rating
Outperform
Price: Aug-24
$548.00
Target
$633.00
Total Rtn
16%
BioPharma
Evan David Seigerman
Analyst
(212) 444-4328
evan.seigerman@bmo.com
What's Next for Mounjaro? Continued Supply
Shortages Likely Driving Declines
Bottom Line:
In support of our expectations for Lilly's Mounjaro, detailed in our note, we are
tracking weekly TRx (total prescriptions) and NRx (new prescriptions) data and
competitive progress to benchmark category growth. We model $4.7B FY2023 Mounjaro
revenues. This week, Mounjaro TRx declined -6% and NRx decreased -5% as Ozempic
rebounded (+11% WoW), Wegovy was flat. Given Lilly's previous comments, recent
declines are likely driven by supply constraints which are planned to loosen in
September.
Key Points
Mounjaro TRx: Total weekly scripts decreased -6% to 199,780 from 211,477 the last
week, or 10.4M scripts annualized (Exhibit 1). Given earnings commentary, we estimate
a majority of scripts in T2D to be paid going forward. Paid scripts include covered $25
copay card scripts. Mounjaro NRx: New weekly scripts decreased -5% to 127,756 from
134,464 (Exhibit 2), potentially indicating supply constraints expected to resolve in 4Q23.
Senior Associate
(646) 746-0391
Keith R. Tapper
keith.tapper@bmo.com
Associate
(646) 438-2627
Malcolm Hoffman, CFA
malcolm.hoffman@bmo.com
Legal Entity:
BMO Capital Markets Corp.
600
2YR Price Volume Chart
550
500
450
400
20
350
15
300
10
250
5
200
Feb
LHS: Price ($) / RHS: Volume (mm)
Aug
Feb
Aug
Source: FactSet
Company Data
0
in $
Dividend
$4.52
Shares O/S (mm)
949.3
Yield
0.8%
Market Cap (mm)
$520,216
Net Debt (mm)
$1,146
AD Vol. (mm)
1.78
BMO Estimates
in $
Incretin market trends: There was a +4.5% increase across the broader incretin
market last week, driven by rebounds in Ozempic (+11%), with Wegovy (+0%) and
Rybelsus (+1%) roughly flat, and declines in Mounjaro (-6%).
(FY-Dec.)
Exhibit 1 - Mounjaro Weekly TRx
Consensus Estimates
EPS
Revenue
2022A
2023E
2024E
$7.94
$9.81
$10.98
$28,542
$33,608
$37,872
2022A
2023E
2024E
$9.57
$12.43
2022A
2023E
2024E
NM
NM
49.9x
EPS
Valuation
P/E
QTR. EPS
Q1
Q2
Q3
Q4
2022A
$2.62
$1.25
$1.98
$2.09
2023E
$1.62a
$2.11a
$2.82
$3.26
Source: IQVIA, BMO Capital Markets
Exhibit 2 - Mounjaro Weekly NRx
Our Thesis
Source: IQVIA, BMO Capital Markets
For disclosure statements, including the Analyst Certification, please refer to page(s) 4 to 7.
Our Outperform rating is supported by our analysis of the
company’s top- and bottom-line growth prospects vs.
peers and consensus. We believe diabetes will lead to
durable and sustained growth. Lilly’s pipeline strategy is
beginning to bear fruit, with a near-term submission of
its AD drug donanemab. We also believe the company’s
oncology franchise will help support the P&L in years to
come.
Eli Lilly - Block Summary Model
Income Statement
2022A
2023E
2024E
Total Revenues
28,542
33,608
37,872
R&D
7,191
9,060
9,847
Valuation
SG&A
6,440
7,202
8,711
Operating Income
7,947
10,295
11,362
Net Income (non-GAAP)
7,187
8,857
9,865
Our target price of $633 is based on a 50:50 blended
discounted cash flow (DCF) SOTP valuation at $784/share
and relative valuation at $483/share.
Diluted EPS (non-GAAP)
$7.94
$9.81
$10.98
905
903
898
2022A
2023E
2024E
7,084
10,273
9,894
Cash Flow From Investments
(3,262)
(1,680)
(1,894)
Cash Flow From Financing
(5,407)
(6,968)
(6,596)
Starting Cash Balance
3,819
2,067
3,692
Downside Scenario
Ending Cash Balance
2,067
3,692
5,096
Our downside scenario reflects lower revenue assumptions
in T2D and obesity and failure in NASH and HFpEF. Plus
lower revenue potential for donanemab, owing to weaker
commercial execution than expected and difficulty building
out the market. Premium to peers narrows, ~30x 2024 EPS.
Diluted Shares Outstanding
Cash Flow Statement
Cash From Operating Activities
Balance Sheet
2022A
2023E
2024E
Total Current Assets
18,035
20,529
23,608
Total Assets
49,490
52,152
55,596
Total Current Liabilities
17,138
17,183
17,670
Total Liabilities
38,714
38,113
37,822
Total Shareholders' Equity
10,775
14,040
17,775
Total Liabilities and Share Equity
49,490
52,152
55,596
Total Cash
2,067
3,692
5,096
Total Debt
21,576
20,930
20,152
Source: BMO Capital Markets, Company Reports
Upside Scenario
$700.00
Our upside scenario assumes Mounjaro additional approval
in obesity, NASH and HFpEF, with WW revenues higher
than our assumptions. Plus Lilly leads GLP-1 class for all
indications. Jardiance and Trulicity revenues continue
to weather competition. We assume WW approval for
donanemab and higher revenues due to better-thanexpected access and infrastructure build out.
$400.00
in USD
-27%
Downside
Scenario
400.00
+16%
Current
Price
548.00
+28%
Target
Price
633.00
Upside
Scenario
700.00
Key Catalysts
1) Full approval of donanemab in Alzheimer's 2) Approval
of Mounjaro in Obesity (2H23/1H24); 3) Full FDA approval of
donanemab in Alzheimer's (TBD); 4) Manufacturing updates
for Mounjaro (TBD).
Company Description
Eli Lilly & Co. engages in the discovery, development,
manufacture and sale of pharmaceutical products. The
firm's products consist of Diabetes, Oncology, Immunology,
Neuroscience, and Other therapies. The company was
founded in May 1876 and is headquartered in Indianapolis,
IN.
BMO Top 15 List Member
U.S. Large Cap Stock
LLY-NYSE
Research
Eli Lilly | Page 2
Glossary
Company
Models
August 25, 2023
Market Share: We are tracking the broader GLP-1 agonists together to observe market share growth.
We've included Mounjaro, Ozempic, Wegovy, and Rybelsus.
Exhibit 3 - GLP-1 TRx Market Share
Source: IQVIA, BMO Capital Markets
If we use the growth rate of the first year following Ozempic's approval, adjusted at 60%, we continue
to see below-growth trajectory for Mounjaro by month.
Exhibit 4 - Mounjaro Monthly TRx Since Launch and Forecast
Source: IQVIA, BMO Capital Markets
Eli Lilly | Page 3
August 25, 2023
Eli Lilly Rating History as of 08/23/2023
I:OP:$311.00
11/18/2021
OP:$320.00
12/15/2021
OP:$310.00
01/07/2022
OP:$305.00
02/04/2022
OP:$330.00
04/21/2022
OP:$358.00
04/28/2022
OP:$369.00
07/18/2022
OP:$396.00
09/06/2022
OP:$410.00
12/13/2022
OP:$430.00
04/14/2023
OP:$505.00
05/03/2023
$700
$600
$500
$400
$300
$200
$100
Oct 2020
Jan 2021
OP:$565.00
07/18/2023
OP:$633.00
08/08/2023
Apr 2021
Jul 2021
Oct 2021
Jan 2022
Closing Price
Apr 2022
Jul 2022
Oct 2022
Jan 2023
Apr 2023
Jul 2023
Target Price
Outperform (OP); Market Perform (Mkt); Underperform (Und); Speculative (S); Suspended (Spd); Not Rated (NR); Restricted (R)
Source: FactSet, BMO Capital Markets
IMPORTANT DISCLOSURES
Analyst's Certification
I, Evan David Seigerman, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities
or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or
views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and
their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in
generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service
to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These
analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on
communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 9B: BMO Capital Markets makes a market in Eli Lilly in United States.
Methodology and Risks to Target Price/Valuation for Eli Lilly (LLY-NYSE)
Methodology: Our target price of $633 is based on a 50:50 blended discounted cash flow (DCF) SOTP valuation at $784/share and relative
valuation at $483/share.
Risks: Key risks include: (1) pricing headwinds facing the industry; (2) revenue results do not meet or exceed expectations; (3) intellectual
property (key patents are deemed invalid or overturned by U.S. or OUS authorities); (4) clinical and developmental (clinical trials may be
negative and pipeline asset may not produce the expected results); and (5) regulatory (the FDA and EMA may delay or fail to approve Lilly’s
investigational products for commercial sale).
Distribution of Ratings (August 24, 2023)
Rating category
BMO rating
BMOCM US
Universe*
BMOCM US IB
Clients**
BMOCM US IB
Clients***
BMOCM
Universe****
BMOCM IB
Clients*****
StarMine
Universe~
Buy
Outperform
47.7 %
18.0 %
49.4 %
53.5 %
58.2 %
57.7%
Hold
Market Perform
49.7 %
16.8 %
48.1 %
44.7 %
40.3 %
37.5%
Sell
Underperform
2.6 %
16.7 %
2.5 %
1.6 %
1.0 %
4.8%
* Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts.
** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services
as percentage within ratings category.
*** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking
services as percentage of Investment Banking clients.
**** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts.
Eli Lilly | Page 4
August 25, 2023