How much could the Alzheimer’s drug add to Eli Lilly’s revenue?

The new Alzheimer’s drug is unlikely to benefit shares of Eli Lilly & Co (NYSE: LLY) as quickly as its weight-loss drug, says Evan Seigerman.

He’s a senior research analyst at BMO Capital Markets.

LLY is globally one of the most valuable pharmaceuticals company at writing with a market cap of over $850 billion.

Kisunla sales could peak at $7.0 billion

The U.S. Food & Drug Administration approved Kisunla (donanemab) – the Alzheimer’s treatment of Eli Lilly on Tuesday, which the BMO analyst agrees is a significant development for patients of the mind-wasting disease.

But it will take time for donanemab to contribute materially to Lilly’s sales and subsequently on its shares price, added Seigerman in an interview with CNBC today.

Eli Lilly stock is currently up some 50% versus the start of 2024.

Biogen’s AD drug hasn’t been selling well

Evan Seigerman does expect Kisunla to contribute about $7.0 billion (peak sales) to Lilly’s bottom line over the long term.

But that’s not as remarkable as $70 billion in peak sales expected for its obesity pill that famed investor and Mad Money host once said could just be the greatest drug of all time. On “Squawk Box”, the BMO analyst said on Wednesday:

Biogen and Eisai have had an [Alzheimer’s] drug on the market since last year. Hasn’t really been selling that well. It’s been a slow slog. [It will] likely be the same for this one, at least to start.

That’s when Alzheimer’s disease currently affects about 7 million Americans and that number is expected to double by 2050. Eli Lilly stock, however, remains attractive considering it pays a dividend yield of 0.58% as well.

Jefferies raises price target on Eli Lilly stock

Eli Lilly has priced its donanemab at $32,000 per year. That’s higher than Biogen’s Leqembi for Alzheimer’s disease at $26,500 per year.

What’s also worth mentioning is that neither of the aforementioned drugs are a definitive cure for AD and both have risks involved including brain swelling and bleeding that may prove to be fatal.  

Still, analysts at Jefferies read the Alzheimer’s news as sufficiently positive to warrant a bump to their price target on Lilly shares. They now see upside in LLY to $1,041 that indicates potential for another 15% gain from here.

Many expect Eli Lilly to be the world’s first pharmaceutical company to hit $1.0 trillion valuation. The New York listed giant is scheduled to report its financial results for the second quarter in early August. Consensus is for it to earn $2.65 a share versus $2.11 per share a year ago.