Bank of America expects Eli Lilly’s Mounjaro to generate as much as $100 billion in annual sales by 2035, if it is approved to treat obesity and other ailments. In May, the Food and Drug Administration approved the once-weekly injection to treat type 2 diabetes. However, the company is actively looking into ways to use the drug to treat seven types. separate disease. Its potential use as a treatment for obesity has been closely watched, but it may also treat kidney disease, sleep apnea, NASH, prediabetes, and cardiovascular uses. Research for these applications is ongoing, with more phase 2 or 3 trials. “While there is clearly an optimistic view of tirzepatide in type 2 diabetes and obesity, we do think its indications overall still have a significant long-term impact,” Geoff Meacham wrote, in a Friday research note. Mounjaro, or tirzepatide, uses a combination of incretin hormones, known as GIP, or glucose-dependent insulinotripic polypeptide, and GLP-1, or glucagon-like peptide-1, to help improve blood sugar levels. Drug treatment for Type 2 diabetes costs about $12,700 annually. Meacham reiterated a buy rating on the stock and raised his price target to $375 from $360 previously. That implies an 18% gain from where Lilly stock is currently trading. Stocks have had a strong session this year, with the stock up 17% versus the S&P 500’s 15% drop. “We recognize, of course, that Lilly’s P/E ~30X (2023) is counterproductive. reflects optimism (companies: 11X), but in our view its distinct growth profile and pipeline progress still justify investing money in stocks at current levels ,” Meacham said. The analyst is drawing some of his optimism from the strong number of prescriptions for Mounjaro since its launch in May 2022. He said the pace has been “significantly higher” than it has been. launched other GLP-1 products such as Novo Nordisk’s Ozempic and Lilly’s Trulicity. During the second-quarter earnings call, Lilly said 72% of patients starting treatment with Mounjaro were new to the GLP-1 type. Of the 28% of patients switching from another GLP-1 drug, 30% came from Trulicity. In addition, Bank of America recently surveyed health insurers to see if they are capable of offering obesity drugs and is encouraged by this finding. Even if major health insurers put restrictions on the drug’s use, Meacham hopes it could generate as much as $4 billion a year as a treatment for obesity. In the least restrictive scenario, Mounjaro could tally up to $48 billion in revenue for this use, he said. Meacham also considers using the drug for other ailments to hit its $100 billion-plus revenue forecast. But he didn’t factor this potential sale into his stock valuation. Indeed, the risk remains as clinical trials have not been completed and FDA approval cannot be assumed. “While we think tirzepatide would be a blockbuster if only approved for T2D and obesity (stage 3 completed), … these additional indications offer further benefits, ” he wrote.
