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Eli Lilly: Mounjaro Needs To Catch Up In 2023

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On February 2, Eli Lilly and Company (NYSE:LLY) announced its financial results for nan 4th fourth of 2022. The mixed net study hasn't caused stock prices to deviate from nan wide marketplace movement, although location was immoderate first momentum owed to EPS guidance exceeding Wall Street expectations astatine nan time. The institution highlighted their apical 10 brands, which generated $5.1 cardinal and 70% of nan company's full Q4 revenues (Figure 1).

Of these cardinal products, nan largest earner by far, Trulicity ($5.7 billion successful 2022 U.S. sales, latest patent expiry successful 2027) and #4 Jardiance ($1.2 billion, 2028) are nan astir susceptible to nonaccomplishment of exclusivity this decade. Longs should dream for continued maturation from nan remainder of nan group to dress up for nan imaginable shortfall. In particular, broader uptake from insurers for Mounjaro (Tirzepatide) would thief nan most.

Figure 1. Q4 2022 Lilly Presentation.

Lilly Key Growth Products' Revenue

Q4 2022 Lilly Presentation

Coverage was explored astatine nan 15 largest wellness security companies successful nan U.S. overall. Combined, these payors power 59% marketplace share, pinch 38 cardinal covered lives arsenic of 2021. The astir communal scheme was examined erstwhile imaginable and are specified successful Table 1. If nan insurer offered non-Medicare medicine supplier plans ("PDP") successful a authorities Marketplace (Obamacare), nan astir populous authorities was chosen (California > Texas > Florida). Humana (HUM) doesn't do Exchanges, truthful their Medicaid scheme and that of Blue Cross and Blue Shield of Texas are nan only ones successful nan survey.

How to publication Table 1:

Tier # Higher Tiers person higher costs share. Drugs successful Tier 4 aliases higher (in 5+-Tier plans) are non-preferred brands and whitethorn besides see narcotics precocious approved by nan FDA aliases specialty narcotics and whitethorn request typical handling. Specialty narcotics are utilized to dainty difficult, semipermanent conditions and whitethorn request to get filled done a specialty pharmacy.

PA Prior authorization is nan process of obtaining support of benefits earlier definite prescriptions whitethorn beryllium filled.

NF A non-formulary supplier is not included connected a plan's Drug List. Exception processes specified arsenic PA aliases Step Therapy could beryllium disposable to petition sum for a NF drug.

X Not Covered narcotics are specifically excluded from sum by nan position of nan plan. Patients apt won't get immoderate reimbursement and will person to salary out-of-pocket for these drugs.

Table 1. 2023 Coverage of Eli Lilly's Recent Growth Products astatine nan 15 Largest Health Insurance Companies successful nan U.S.

Rank

Commercial wellness security plans

Mounjaro

Retevmo

Emgality

Olumiant

Verzenio

1

Kaiser Permanente [Southern CA Commercial HMO 3-Tier]

x

x

x

x

x

2

Elevance Health (Anthem) National Drug List 5-Tier

NF

NF PA

3 PA

NF PA

5 PA

3

Health Care Service Corporation

BCBS Illinois Basic Drug List

x

5 PA

3 PA

x

5 PA

BCBS Montana Basic Drug List

x

5 PA

3 PA

x

5 PA

BCBS New Mexico Basic Drug List

x

5 PA

3 PA

x

5 PA

BCBS Oklahoma Basic Drug List

x

5 PA

3 PA

x

5 PA

BCBS Texas Basic Drug List

x

5 PA

3 PA

x

5 PA

4

UnitedHealth [CA Traditional 4-Tier]

2 PA

4 PA

2 PA

2 PA

2 PA

5

Centene [Health Net Essential Rx Drug List]

x

4 PA

2 PA

x

4 PA

6

CVS Health (Aetna Standard Opt Out)

3

4

2

5

5

7

GuideWell (Florida Blue) ValueScriptRx

x

5 PA

5 PA

x

5 PA

8

Blue Cross Blue Shield of Michigan [BCN HMO]

2

4 PA

3 PA

5 PA

4 PA

9

Highmark Healthcare Reform Comprehensive 3-Tier Incentive

2

3 PA

2 PA

3 PA

2 PA

10

Blue Cross of North Carolina Enhanced 5 Tier

3 PA

4 PA

2 PA

4 PA

4 PA

11

Humana Rx5

3

5 PA

x

x

5 PA

12

Blue Cross and Blue Shield of Alabama Blue Saver Bronze

x

5

3

6

5

13

Blue Cross Blue Shield of Massachusetts

2

4 PA

5 PA

x

4 PA

15

Independence Health Group [Value formulary 5-tier]

3

5 PA

3 PA

5 PA

5 PA

Rank

Health Insurance Marketplace plans

Mounjaro

Retevmo

Emgality

Olumiant

Verzenio

1

Kaiser Permanente [CA Marketplace]

x

x

x

x

x

2

Elevance Health (Anthem) CA Select Drug List

NF

NF PA

2 PA

NF PA

NF PA

3

Health Care Service Corporation

BCBSIL 6 Tier HIM Drug List

x

5

3

6

5

BCBSMT 6 Tier HIM Drug List

x

5

3

6

5

BCBSNM 6 Tier HIE Drug List

x

5

3

6

5

BCBSOK 6 Tier HIM Drug List

x

5

3

6

5

BCBSTX STAR & STAR Kids

2 PA

2 PA

2

2 PA

2 PA

4

UnitedHealth Group [TX QHP Standard]

2 PA

NF

NF

4 PA

NF

5

Centene [Health Net CA Essential Rx Drug List]

x

4 PA

2 PA

x

4 PA

6

CVS Health (Aetna Health Exchange Plan: CA)

x

x

x

x

x

7

GuideWell (Florida Blue) ValueScriptRx

x

5 PA

5 PA

x

5 PA

8

Blue Cross Blue Shield of Michigan [BCN HMO]

2

4 PA

3 PA

5 PA

4 PA

10

BCBS North Carolina Essential Q

x

5

3

6

5

11

Humana [FL Medicaid Preferred Drug List]

x

x

2

x

2

12

Blue Cross and Blue Shield of Alabama Blue Saver Bronze

x

5

3

6

5

14

Molina Healthcare [CA Marketplace]

x

x

2

x

x

Rank

Medicare Prescription Drug Plans

Mounjaro

Retevmo

Emgality

Olumiant

Verzenio

1

Kaiser Permanente

5

5

x

5

5

2

Anthem Blue Cross MedicareRx [B5]

x

5 PA

3 PA

x

5 PA

3

Health Care Service Corporation

BCBS Illinois Blue Cross MedicareRx Basic

x

5 PA

3 PA

x

5 PA

BCBS Montana Medicare Advantage Classic PPO

x

5 PA

3 PA

x

5 PA

BCBS New Mexico MedicareRx Basic

x

5 PA

3 PA

x

5 PA

BCBS Oklahoma MedicareRx Basic

x

5 PA

3 PA

x

5 PA

BCBS Texas MedicareRx Basic

x

5 PA

3 PA

x

5 PA

4

UnitedHealth [AARP MedicareRx Walgreens PDP]

x

5 PA

x

x

5 PA

5

Centene [Wellcare Value Script PDP]

x

5 PA

3 PA

x

5 PA

6

CVS (Aetna) [SilverScript Choice PDP]

x

5 PA

x

x

5 PA

7

GuideWell (Florida BlueMedicare Premier Rx)

x

5 PA

3 PA

x

5 PA

8

BCBS of Michigan Prescription Blue PDP Select

x

5 PA

3 PA

x

5 PA

9

Highmark Performance Formulary

3 PA

5 PA

3 PA

5 PA

5 PA

10

BCBS North Carolina Blue Medicare Rx Standard

x

5 PA

3 PA

x

5 PA

11

Humana Basic Rx Plan PDP

3

5 PA

4 PA

x

5 PA

12

BCBS Alabama BlueRx Essential

x

5 PA

3 PA

x

5 PA

13

Blue Cross Blue Shield of Massachusetts

x

5 PA

x

x

5 PA

14

Molina Medicare Choice Care (HMO)

x

5 PA

x

x

5 PA

15

Independence Keystone 65 Basic Rx HMO

NF

5 PA

5 PA

5 PA

5 PA

Approved past May, Mounjaro is hampered by suboptimal coverage. The supplier did make it successful clip onto nan all-important Standards of Care successful Diabetes-2023 (Abridged for Primary Care Providers), published by nan American Diabetes Association successful December. At nan earnings call, Lilly Chief Financial Officer Anat Ashkenazi declared that, "As of January 1st, entree stands conscionable complete 50% for patients pinch type 2 glucosuria crossed commercialized and Part D." This declare appears existent astatine nan commercialized level, but not for Medicare, wherever Mounjaro appeared connected only 2 PDPs retired of nan Top 10, and 4 lists overall.

Because of its early motorboat phase, this intends past 4th nan supplier was connected that galore aliases less formularies. Despite its superiority to Ozempic 1mg by glucosuria archrival Novo Nordisk (NVO), galore astir apt see Mounjaro arsenic conscionable a somewhat much potent incretin mimetic, and location is nary head-to-head versus higher strengths of Ozempic. Some whitethorn moreover beryllium holding disconnected for results connected cardiovascular and renal endpoints.

Novo Nordisk's marketplace domination of nan incretin-based narcotics marketplace has truthful acold been prevented by Ozempic's ongoing world shortage. This is exacerbated by societal media extolling nan weight nonaccomplishment benefits of nan Wegovy brand. Doctors aren't really discerning astir nan differences astatine nan higher doses (to them it's each nan aforesaid semaglutide), pharmacies don't want to upset nan weight nonaccomplishment crowd by trying to reserve Ozempic for glucosuria patients, and insurers don't restrict by test codes, each starring to rampant off-label use. Some pharmacists whitethorn past propose Mounjaro erstwhile doctors inquire for alternatives, but that whitethorn not beryllium enough.

It is clear that, astatine nan least, Lilly would do good to put resources identifying and targeting salient societal influencers who person type 2 diabetes. A institution is constricted by nan FDA to whatever's successful nan explanation erstwhile dealing pinch prescribers, and there's a grey area erstwhile communicating accusation pinch non-prescribing individuals. Nonetheless, Kaiser Permanente, known for its integration of attraction and attraction connected cost-effectiveness, sees immoderate off-label worth for Mounjaro. While it's not yet indicated for weight loss, Kaiser, aft anterior authorization, allows up to 4 months of Mounjaro usage for chronic weight guidance of patients who don't needfully person diabetes.

The different products, having been astir longer, person bully to awesome coverage, pinch Olumiant lacking connected nan Medicare side. Turning to nan different supplier mentioned connected nan call, Chief Scientific and Medical Officer Dan Skovronsky yet revealed nan submission a supplemental New Drug Application ("sNDA") for Verzenio successful big patients pinch hormone receptor ("HR")-positive, quality epidermal maturation facet receptor 2 (HER2)-negative, node-positive, early bosom crab ("BC") astatine precocious consequence of recurrence. If nan FDA expands nan explanation beyond nan presently indicated cohort of Ki-67 people ≥20%, it could double nan number of early BC patients eligible to person Verzenio. The reappraisal is apt to beryllium positive, fixed that nan absolute betterment of invasive disease-free endurance complaint (6.4%) compared to placebo accrued aft 4 years of travel up from nan erstwhile 2-year (2.8%) and 3-year (4.8%) interim rates.

To conclude, Mounjaro's placement connected PDP's is simply a solid half-empty/half-full scenario. It has done good pinch its coverage, but could do overmuch better. Jaypirca will acquisition formulary information successful nan adjacent mates of months and will beryllium reported connected accordingly. The likelihood of sNDA support will decidedly bolster early Verzenio sales, but nan reappraisal tin return up to 10 months, truthful nan use will beryllium seen successful 2024 and beyond.

Finally, nan bully and bad points astir nan institution stay mostly unchanged from last month's coverage. However, nan catalysts mentioned remain, and if positive, on pinch immoderate formulary "wins" for Mounjaro, mightiness beryllium capable to nudge Eli Lilly and Company banal from Hold to Buy.

Editor's Note: This article discusses 1 aliases much securities that do not waste and acquisition connected a awesome U.S. exchange. Please beryllium alert of nan risks associated pinch these stocks.

This article was written by

Clinically Sound Investor floor plan picture

The Clinically Sound Investor is simply a pharmacist pinch a PharmD and a BA successful psychology. He has worked crossed nan spectrum from very mini independent and infirmary pharmacies to nan immoderate of nan largest unit corporations and aesculapian centers successful nan nation, arsenic good arsenic acquisition successful specialty and message bid settings. Fascinated by watching nan emergence of Walmart and Apple aft 2008, he now follows nan proposal "know thyself" and puts expertise of understaning technological lit to investigation biotechnology stocks. His investments early connected were driven by binary events specified arsenic FDA Advisory Committee meetings and PDUFA dates (approvals). Despite first successes, location were excessively fewer of these events, truthful he expanded into predicting Phase II/III proceedings results. His writings should not beryllium considered financial proposal aliases nan ground for finance decisions. While his interpretations of objective proceedings results--which whitethorn beryllium overlooked aliases moreover thoroughly misunderstood by Wall Street--could beryllium helpful, they're only arsenic bully arsenic nan original reports they travel from. Although written by scientists and doctors, location will ever beryllium a slant from nan sponsoring company, aliases worse (like, say, missing data...).

Disclosure: I/we person nary stock, action aliases akin derivative position successful immoderate of nan companies mentioned, and nary plans to initiate immoderate specified positions wrong nan adjacent 72 hours. I wrote this article myself, and it expresses my ain opinions. I americium not receiving compensation for it (other than from Seeking Alpha). I person nary business narration pinch immoderate institution whose banal is mentioned successful this article.

Editor: Naga



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