Morgan Stanley: Oral GLP-1 Weight Loss Drug Can Propel Eli Lilly and Company to a $1 Trillion Valuation

16.02.2024 - 19:13 / wccftech.com / Morgan Stanley / Rohail Saleem

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

Eli Lilly and Company (NYSE: LLY) can become the first biopharma company to reach the $1 trillion valuation threshold, courtesy of an under-trial orally administered GLP-1 drug, Orforglipron, as per the latest investment note from Morgan Stanley.

Related Story Eli Lilly and Company’s Tirzepatide GLP-1 Agonist For Weight Loss Reverses Fatty Liver Disease in a “Clinically Meaningful” Way

To wit, Morgan Stanley's Terence Flynn sees Orforglipron's phase three trial results, due in 2025, as a key catalyst for Eli Lilly and Company, paving the way for the high-flying pharmaceutical stock to potentially reach a $1 trillion valuation. Accordingly, the Wall Street giant has now pegged a street-high stock price target of $950 per share for Eli Lilly, corresponding to an upside potential of over 23 percent.

Glucagon-Like Peptide-1 (GLP-1) hormone helps suppress hunger in a number of ways, including by stimulating the release of insulin in the pancreas, blocking the unhelpful release of glucagon after meals to prevent excess glucose from entering the bloodstream, and slowing gastric emptying to reduce the overall intake of food.

Eli Lilly and Company currently offers the injectable Tirzepatide as one of its proprietary drugs to combat diabetes and obesity, leveraging both GLP-1 and Glucose-dependent Insulinotropic Polypeptide (GIP) agonists to offer better efficacy. Eli Lilly markets Tirzepatide under the Mounjaro and Zepbound labels, with the former geared toward diabetes and the latter billed as a treatment for obesity.

Nonetheless, orally administered GLP-1 drugs are currently considered the holy grail in pharmaceutically-induced weight loss. As per the results of Orforglipron's phase two trial data, study participants were able to achieve an average weight loss of between 8.6 percent and 12.6 percent at 26 weeks of treatment.

We recently reported on the positive effect that Eli Lilly and Company's Tirzepatide GLP-1 agonist produced in countering the fatty liver disease Metabolic dysfunction-Associated Steatohepatitis (MASH).

While announcing its earnings for the fourth quarter of 2023, Eli Lilly and Company disclosed that it beat consensus revenue expectations of $8.95 billion for the quarter by reporting actual revenue of $9.35 billion, with Mounjaro's quarterly sales increasing to $2.21 billion vs. the $1.75 billion consensus estimate. The drug maker now expects to earn between $40.4 billion and $41.6 billion in full-year revenue.