David Ricks, CEO, Eli Lilly
Scott Mlyn | CNBC
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Shortly before the closing bell, we will be buying 25 shares of Eli Lilly (LLY) at roughly $243.81. Following the trade, the Charitable Trust will own 400 shares of Eli Lilly. This buy will increase Eli Lilly’s weight in the portfolio from about 2.28% to 2.43%.
After avoiding the temptation of paying up for stocks yesterday, we will be making one small buy Friday afternoon because we think you have to hold your nose and pick something to nibble on when the broader market is getting hit as hard as it is today. We are going with Eli Lilly today as we look at shares now down roughly 11% from its 52-week high as an opportunity to scale deeper into this relatively newer position.
We think Eli Lilly is one of the best-run companies in the pharmaceutical industry with its diabetes-focused portfolio that consistently delivers growth without any major loss of exclusivity risk. Eli Lilly also has a strong track record of expanding margins.
But what excites us most about this story is the company’s pipeline. More specifically, Eli Lilly is developing two assets that CEO David Ricks has previously called “two of the most valuable projects we’ve ever worked on and maybe the most valuable projects in the industry right now.”
The two projects Ricks referenced are donanemab as a treatment for Alzheimer’s and tirzepatide in type 2 diabetes and obesity. We think both drugs will be approved by the FDA next year and represent massive long-term opportunities that will support industry-leading growth for years to come.
Back on November 18th in their coverage initiation of Eli Lilly, analysts at BMO Capital called donanemab a potential $10 billion opportunity if access hurdles can be overcome. And in an October research note from JPMorgan, the analysts estimated tirzepatide could be a $10 billion-plus opportunity in type 2 diabetes with potentially multi-billions more in obesity.
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(Jim Cramer’s Charitable Trust is long LLY.)