Eli Lilly and Co (NYSE:LLY) Long Term Prospects Dependent on Alzheimer Drug Outcome


Dallas, Texas 07/21/2015 (Financialstrend) – Eli Lilly and Co (NYSE:LLY) finds itself in a tight spot ahead of the release of clinical results for its drug Solanezumab, intended for Alzheimer treatment. The outcome of the trial will have a huge bearing on whether the drug will be the first to be marketed as a treatment for slowing progression of the Alzheimer disease.

 Eli Lily Up ON Alzheimer Drug Prospects

A lot is at stake with the release as the Alzheimer program has made Eli Lilly and Co (NYSE:LLY) trade more as a biotechnology company than a pharmaceutical company. The company is also struggling with the expiration of patents of some of its lead drugs calling for new blockbusters to sustain earnings. The excitement around the Alzheimer program has seen the stock soar by 40% over the past one year and up by 20% against a relatively flat pharmaceutical sector.

The fact that more than 5.3 million suffer from Alzheimer in the US alone provides a good market for Eli Lilly and Co (NYSE:LLY) upon favorable results and approval. The number could triple by 2050 providing a huge marketplace for the drug as currently approved treatments only address symptoms rather than slow the disease progression.

 Annual Sales of $3 Billion Looming

A huge market opportunity awaits a drug that can slow the progression of the disease and even if it will be limited to a set of patients, it is sure to become a blockbuster.  Jeffrey Holford, an analyst at Jefferies & Co, believes Eli Lilly and Co (NYSE:LLY)’s drug upon approval could generate peak annual sales of up to $3 billion.

Positive results from the ongoing clinical trial should bolster the stock’s sentiments on the Street and more so bolster its outlook in terms of favorable sales and earnings. However, the drug also poses risks to the stock as previous studies have only amounted to negative results. The odds of success are still daunting and may come to haunt the stock should the results fail to meet expectations.