Eli Lilly lifts revenue outlook on weight-loss drug sales, trims profit view on deal charges

By Patrick Wingrove

Oct 29 (Reuters) - Eli Lilly LLY.N raised its full-year revenue forecast and beat third-quarter earnings expectations on Thursday, propelled by surging demand for injectable weight-loss drugs that could allay investor concerns about price erosion in US government health plans.

The Indianapolis-based drugmaker now expects full-year revenue of $91 billion to $92 billion, underscoring its expanding lead in the multibillion-dollar GLP-1 market over Danish rival Novo Nordisk NOVOb.CO that has propelled Lilly to a $1.2 trillion market valuation.

Lilly trimmed its adjusted profit outlook, however, to $35.00 to $36.00 per share, as $4.57 per share of acquired research charges from recent deals more than offset a $4.07 improvement in underlying profit guidance at the midpoint. The charges, taken in the third quarter, are primarily related to the acquisitions of AtaiBeckley and Curevo, Lilly said.

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Lilly previously forecast revenue of $85.0 billion to $87.0 billion and earnings of $35.50 to $36.50 per share.

Lilly posted third-quarter revenue of $24.4 billion, topping analyst expectations of $22.61 billion, while adjusted profit of $7.48 per share beat estimates of $6.26, according to LSEG data.

Revenue included about $900 million of benefits, primarily $410 million of milestone payments tied to diabetes drug Jardiance, which Lilly said are the last it expects to receive, and favorable adjustments to rebate and discount estimates.

Third-quarter sales of diabetes drug Mounjaro reached $10.72 billion, topping Wall Street expectations of $10.16 billion, according to LSEG data, while its related obesity injection Zepbound brought in $5.35 billion versus estimates of $5.09 billion.

The robust sales will help ease market worries that severe price erosion from the $50-a-month price tag for Medicare recipients would outweigh explosive volume gains. Analysts at Bernstein said data showed that Lilly had captured about 70% of the 700,000 Medicare patients who recently initiated treatment with a GLP-1 medication.

While the new US pilot unlocked coverage for potentially millions who use the government's Medicare program for people aged 65 and over, the bulk of Lilly's non-reimbursed volume has historically moved through its $449-a-month cash-pay platform, raising stakes over how the discounts will impact long-term margins.

Lilly's newer obesity pill Foundayo brought in $184 million, compared with analyst estimates of $216.86 million.

Investors are closely tracking the Foundayo rollout as a key test of whether Lilly can blunt Novo Nordisk's first-mover edge with its oral Wegovy.

While initial US Foundayo prescriptions have trailed its Danish rival, some investors have downplayed the early lag, expecting the Lilly pill to emerge as a significant growth driver as it launches in more international markets.

Oral Wegovy led to about a 14% reduction in body weight over 64 weeks, and Foundayo about an 11% reduction over 72 weeks, in separate studies.

Foundayo was launched in the US and Britain earlier this year and could potentially begin selling in other European countries by year-end.

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Lilly's realized prices fell 15% in the third quarter, offsetting part of a 53% rise in volume. US prices fell 7%, a decline Lilly attributed primarily to Zepbound and said was partly offset by adjustments to rebate and discount estimates. Outside the US, prices fell 29%, driven mainly by Mounjaro's inclusion on China's national reimbursement drug list.

Even as Lilly's obesity injections maintain commercial momentum, Wall Street's attention is shifting toward retatrutide, the company's next-generation weight-loss candidate slated for regulatory submission next year.

Retatrutide has been shown to drive average weight loss of 24% in midstage trials, topping results from drugs already on the market.