Eli Lilly Inks $812.5M Covid-19 Antibody Supply Deal With US; Street Sees 18% Upside

Eli Lilly has struck an $812.5 million agreement with the US government to supply an additional 650,000 vials of its bamlanivimab (LY-CoV555), an investigational neutralizing antibody, for the treatment of COVID-19.

According to the agreement, the US government will receive the bamlanivimab vials by January 31, 2021, with at least 350,000 of the doses delivered in December 2020. The deal is a follow-up on the $375 million supply agreement reached with the US government in October for 300,000 vials of its bamlanivimab.

The additional order comes after Lilly’s (LLY) bamlanivimab was granted emergency use authorization by the US Food and Drug Administration for the treatment of mild to moderate COVID-19 in patients who are at high risk for progressing to severe COVID-19 or hospitalization.

The updated purchase agreement is estimated to add $500 million of revenue and approximately 25 cents of additional earnings per share to Lilly’s 2020 guidance range provided on October 27, the company said.

Bamlanivimab is a potent, neutralizing IgG1 monoclonal antibody (mAb) directed against the spike protein of SARS-CoV-2. It is designed to block viral attachment and entry into human cells, thus neutralizing the virus, potentially preventing and treating COVID-19.

“Given the significant increase in COVID-19 cases and hospitalizations in the U.S., we are doing everything possible to quickly provide more bamlanivimab doses to Americans,” said David A. Ricks, Lilly’s CEO. “We are proud of our work to deploy significant manufacturing capacity and remain committed to enabling widespread and equitable access to bamlanivimab. The US government’s effort to allocate bamlanivimab around the country is critical to ensuring it reaches patients who need it the most.”

Lilly targets manufacturing of up to 1 million doses of bamlanivimab 700 mg by the end of 2020 for use around the world. The supply of Lilly’s antibody therapy is expected to increase substantially beginning in Q1 2021, as additional manufacturing resources come online throughout the year via its five production sites worldwide, the drugmaker said.

Shares of LLY have advanced more than 10% this year and Wall Street analysts have a cautiously optimistic Moderate Buy consensus on the stock. That’s with an average analyst price target of $171.67, indicating 18% upside potential lies ahead.

Ahead of Lilly’s 2021 financial guidance release on Dec. 15, Mizuho analyst Vamil Divan reiterated a Hold rating on the stock with a $156 price target. Vamil estimates that the company’s COVID-19 therapeutic antibody program will generate about $780 million in revenues in 2021.

“Eli Lilly continues to be viewed as a best-in-class story in large cap biopharma, with a relatively diverse new product growth story, limited patent expiry risk over the next decade, and opportunity for further margin expansion,” Divan wrote in a note to investors. “However, the stock trades at a healthy premium to its peers, and management needs to continue to execute properly to maintain that premium.” (See Eli Lilly’s stock analysis on TipRanks).

Related News:
Merck Cashes In On Moderna Equity Investment As Stock Pops 631% YTD

Roche’s Covid-19 Antibody Test Gets FDA Green Light; Street Sees 24% Upside
AdaptHealth Snaps Up AeroCare In $2B Deal; Shares Pop 19%

Tired of arriving late to the Big Returns Party?​
Most investors don’t have major gainers like TSLA or NVDA on their radar from the start.
The profusion of opinions on social media and financial blogs makes it impossible to distinguish between real growth potential and pure hype.
​​For the past decade, we have developed and perfected technology designed to help private investors, just like you, find the best opportunities, with the greatest upside potential, in any financial climate.​
Learn More