Analyst: Here's Why Eli Lilly Is Worth More Than It Used To Be

In a report published Monday, Cowen and Co analysts maintained an Outperform rating on Eli Lilly and Company (NYSE: LLY), while raising the price target from $78 to $85, after the release of BIIB037 data.

In the report Cowen noted, "Several factors make comparing Alzheimer's antibody data to date challenging. Patients in LLY's EXPEDITION I and II trials were not scanned for presence of amyloid plaque in advance, resulting in about 25% having non-Alzheimer's dementia. These patients are believed to have not declined as rapidly as patients with Alzheimer's dementia, benefiting both the solanezmab and placebo groups. "

The BIIB037 study included prodromal and mild patients, with the former unlikely to decline as rapidly as mild patients, which benefited BIIB037. While EXPEDITION I and II were international trials, BIIB's PRIME trial was US-based. Given that the U.S. patients in EXPEDITION I and II performed better than the ex-U.S. cohort, BIIB037 may have benefited from being U.S. only.

"When comparing MMSE score versus placebo, which is the fairest assessment, BIIB037 is the clear winner…When comparing MMSE score versus baseline, the declines are more similar," the analysts said.

The EXPEDITION III trial for Solanezumab is scheduled for completion in December next year. Since treatment would last 18 months, enrollment should already be near complete. The estimates for solanezumab sales in 2019 and 2020 are at $100MM and $500MM, respectively.

With Crenezumab likely being delayed, the estimates for its sales stand at CHF25MM in 2018 and CHF75MM in 2020.

"A number of promising new drug rollouts, in tandem with the favorable Alimta U.S. District Court patent ruling gives us greater confidence in LLY's top-tier sales and EPS growth prospects. The adverse U.K. Alimta decision was already factored into our thinking. Admittedly, pipeline results have been mixed, but visibility has improved overall, LLY's margin targets appear achievable, 2014-20E EPS CAGR of 11% is the best in pharma, and the dividend yield is attractive," the analysts added.