Eli Lilly Could Make A Lot More From Alzheimer's Drug Than Originally Thought

• Eli Lilly and Co LLY shares have gained 26 percent year-to-date, while still trading short of their 52-week high of $92.85.
• Deutsche Bank’s Gregg Gilbert upgraded the rating on the company from Hold to Buy, while raising the price target from $85 to $99.
• Solanezumab has the potential to impact the underlying course of Alzheimer’s Disease, Gilbert stated.

The peak estimate for solanezumab has been raised from ~$1B to ~$3B. Although the key Phase 3 read-out for sola is still about a year away, analyst Gregg Gilbert expects an increase in investor interest ahead of this event.

“Sola is by no means a cure for Alzheimer’s Disease (AD), but unlike current treatments it has the potential to affect the underlying course of the disease,” Gilbert wrote.

He explained that the current FDA-approved therapies for the diseases focused on symptomatic relief, and more than 20 million prescriptions had been written for them over the last year, despite limited clinical effect of these drugs. The existing market is US alone is estimated at $14B, applying brand pricing.

The market potential for novel products like solanezumab is about $27B in the US alone. “We do not expect sales to reach this level, but there seems to be room for several products with multi-billion dollar sales potential,” Gilbert commented.

The analyst is also excited about the prospects for the diabetes product Jardiance, which seems to be gaining momentum after the recent finding that the product improves cardiovascular outcomes.

Gilbert believes that management has “done a solid job stocking the pipeline with interesting late-stage development candidates,” and expects this to drive robust revenue and EPS growth in 2018 and beyond.