Lilly lays out 2021 expectations, gene therapy acquisition

AP – Shares of Eli Lilly climbed on Tuesday after the drugmaker laid out a better-than-expected revenue forecast and plans to buy a young company developing a potential Parkinson’s disease treatment.

Lilly also projected a 2021 earnings range that brackets average Wall Street expectations.
The Indianapolis-based maker of diabetes treatments expects revenue ranging from USD26.5 billion to USD28 billion next year. That’s due partially to an expected USD1 billion to USD2 billion in sales from COVID-19 treatments, one of which received the United States (US) government approval for emergency use last month.

The company also expects sales from products like the diabetes treatment Trulicity and the cancer treatment Verzenio to help revenue growth.

FactSet said analysts anticipate USD26.5 billion in revenue.

Lilly said earnings next year will fall between USD7.75 and USD8.40 per share. Analysts forecast, on average, USD8.08 per share.

The company also bumped up both its revenue and adjusted earnings forecasts for 2020 due in part to a purchase agreement with the US government for the COVID-19 treatment bamlanivimab.

The drugmaker also said on Tuesday that it will spend about USD880 million in cash, to buy Prevail Therapeutics Inc in a deal that could wind up costing more than USD1 billion depending on drug approvals.

New York-based Prevail was founded in 2017, and its shares started trading publicly last year.

The biotech company has no products on the market but several treatments in early development stages. Aside from Parkinson’s disease, the company is focussed on developing treatments for forms of dementia and Gaucher disease.

Lilly will pay USD22.50 per share initially and then could pay an additional USD4 per share for the first regulatory approval of a product from Prevail’s pipeline. That approval has to happen before the end of 2024 for Prevail shareholders to get the full payment.

Lilly executives had indicated that they were looking to make smaller, so-called tuck-in acquisitions involving companies that specialise in gene therapy, said Mizuho Securities USA Analyst Dr Vamil Divan.

Divan said in a research note that the deal “makes strategic sense at a reasonable price”.