FDA approval of Eli Lilly’s Alzheimer’s drug solidifies our decision not to profit | Wilnesh News
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street. Market rebound: Stocks were higher across the board on Tuesday afternoon, with the Nasdaq up 0.7% and on track to set consecutive record closings. The S&P 500 had been hovering near flatline earlier in the session, rising around 0.4%. The Dow Jones Industrial Average shrugged off early losses to gain about 100 points, or 0.25%. Big news from Eli Lilly: The U.S. Food and Drug Administration approved Eli Lilly’s Alzheimer’s treatment donanemab on Tuesday. The drug will be sold under the brand name Kisunla and will cost $32,000 for a 12-month course. Eli Lilly’s stock price fell from its intraday lows on the news. The stock came under more pressure earlier in the day as President Joe Biden and Vermont Sen. Bernie Sanders criticized the cost of the company’s fast-growing weight loss drug Zepbound. Kisunla is not expected to be a significant driver of growth for Eli Lilly this year or in 2025, especially given the billions of dollars in projected sales for Zepbound and its sister drug, Mounjaro, which has the same active ingredient, zepatide, and is used in In the treatment of type 2 diabetes. Still, we view the FDA’s approval of Eli Lilly’s Alzheimer’s drug as an important catalyst for the company to reach a $1 trillion market cap. Analysts expect Kisunla’s sales to reach $477 million by 2025 and about $1 billion by 2026, according to FactSet. Eli Lilly is already developing next-generation treatments to succeed Kisunla. Eli Lilly had hoped to win approval for Kisunla by the end of March, but the timeline was pushed back after the FDA unexpectedly convened an advisory panel meeting to take a closer look at safety and effectiveness data. The 11-member group finally met in June and unanimously supported the drug. Tuesday’s approval marks a major breakthrough in Eli Lilly’s decades-long effort to treat Alzheimer’s disease, a memory-robbing disease that afflicts millions of Americans. Before Kisunla, Eli Lilly had shortcomings on a variety of other experimental drugs, most notably solanezumab, which failed in a high-profile late-stage study in 2016. The company officially ended development of the drug last year. Eli Lilly and Company’s Kisunla is the second treatment of its kind to receive full FDA approval, following Leqembi, co-developed by Biogen and Eiasi in July 2023. progress. These abnormal amyloid clumps have long been an indicator of Alzheimer’s disease, although their exact role in the disease is unclear. Both drugs are given intravenously. Leqembi’s rollout has been slower than expected as the U.S. health care system struggles to build the infrastructure to support this novel treatment. Patients need to see a doctor first to determine if they qualify for anti-amyloid drugs. Then, intravenous infusions need to be scheduled to deliver the drug every two weeks, as well as regular MRI scans to monitor for side effects, including brain swelling and bleeding. Leqembi is expensive, costing more than $26,000 per year, so ensuring insurance reimbursement is another important piece of the treatment puzzle. Biogen said in late April that use of Leqembi was accelerating, with executives making encouraging comments about hospital systems being better able to handle patients on the drug. Alisha Alaimo, head of Biogen’s North American operations, said Eli Lilly’s entry into the Alzheimer’s market could further accelerate progress. “In a field like this where the physician community is so heavily invested in support, it’s always good to have competitors or alternatives,” Alaimo said at the Goldman Sachs Healthcare Conference on June 12. “That’s a good thing for physicians. That’s a good thing, but more importantly, Eli Lilly’s involvement will make the market grow faster. We debated profit-taking at Eli Lilly earlier Tuesday, but ultimately decided against it, as any rising political risks from Washington in the short term won’t change the pharma giant’s long-term outlook. We’ve been saying for years that its growth prospects are the best among its large-cap peers represented by Mounjaro and Zepbound, and now Kisunla can officially be considered part of the story. Corona is coming: The club that controls Constellation Brands will report quarterly results before the market opens on Wednesday. A post-earnings conference call is scheduled for 10:30 a.m. Eastern time. Despite concerns that severe weather around Memorial Day could hurt Constellation’s quarter, some analysts remain optimistic about the stock’s upcoming publication. Goldman Sachs said in a note to clients on Friday that investor expectations were lower due to weaker trends across the industry. But analysts say the Corona and Modelo parent company is poised for significant growth in revenue and profits, based on feedback from dealer and retailer contacts. Wall Street expected the company to earn $3.46 per share on revenue of $2.67 billion, according to LSEG estimates. We’ll also be looking for comments on how the summer went for its main Mexican beer brand and whether there are green shoots in Constellation’s struggling wine and spirits business. Next up: U.S. stocks close early Wednesday at 1 p.m. ET, ahead of July 4. Closed for holidays on Thursday. Before the break, however, we’ll get a look at private employment growth in June via Wednesday morning’s ADP employment survey and weekly initial jobless claims. (See here for a complete list of stocks in the Jim Cramer Charitable Trust.) As a subscriber to Jim Cramer’s CNBC Investing Club, you will receive trade alerts before Jim makes his trades. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation is created or created by any information you receive in connection with the Investment Club. No specific results or profits are guaranteed.
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street.
