Hopes are sky-high for Eli Lilly’s recently launched weight reduction drug Zepbound. Investors can be tuning into the corporate’s fourth quarter earnings call on Feb. 6, wanting to hear more about how that rollout goes. One key statistic can be the number of economic health insurers providing coverage of the drug, which was approved by the Food and Drug Administration on Nov. 8. Lilly also is predicted to disclose its outlook for 2024 for the primary time. Zepbound, a once-a-week injection, has only been available in pharmacies since early December, but the common analyst expects that the drug’s sales reached $75 million within the fourth quarter, in response to StreetAccount. More importantly, by the tip of 2024, analysts expect sales to ramp as much as $3.79 billion, then greater than double to $7.83 billion by 2025. Those estimates have been creeping higher heading into Eli Lilly’s report, and analysts see the potential for further upside when Lilly provides its outlook. ‘Off to a powerful start’ “While we acknowledge that the launch is off to a powerful start, with Zepbound achieving greater TRx [total prescription] volume than Mounjaro on a launch-adjusted basis, we’re relatively conservative in our 4Q estimate based on the timing of the launch (late in 4Q) and what we expect can be relatively high gross-to-net discounts (within the ~80% range),” wrote Goldman Sachs analyst Chris Shibutani in research note on Sunday. Goldman Sachs said the info from market researcher IQVIA suggests that Zepbound is capturing market share from Novo Nordisk’s anti-obesity drug Wegovy, but your entire category has been growing. “We view payor access and provide as key debates within the early launch — where access is gated not only by formulary adoption, but in addition employer opt-ins; and provide continues to be tight across LLY’s portfolio of incretin products,” Shibutani said. Lilly’s Mounjaro and Zepbound each use tirzepatide as an lively ingredient, but Mounjaro is indicated for type 2 diabetes, while Zepbound aids weight reduction. Tirzepatide mimics two incretin hormones within the body, GLP-1 and GIP, to manage insulin and control hunger. Trulicity, one other diabetes treatment sold by Lilly, also is taken into account an incretin. Drugs like Wegovy and Zepbound have been hailed for his or her ability to assist patients shed more kilos than earlier kinds of weight reduction medications, with Zepbound’s average success even topping Wegovy’s in clinical trials. Still, patients in search of these drugs can face significant hurdles. For instance, patients covered by Medicare cannot get coverage for these drugs because of federal regulations. Nonetheless, a minimum of 16 states have expanded access to some anti-obesity medications, in response to Bank of America. Some business insurance coverage require prior authorizations or have limitations on using these drugs. Paying out of pocket is not an option for a lot of patients because the drugs each have list prices that top $1,000 for a month’s supply. Based on Bank of America, greater than 80% of economic insurance coverage have put Wegovy on the formulary (the list of covered drugs) and about half of employers have opted into it. It took time for Novo Nordisk to achieve that level of access. Investors are curious to learn if Eli Lilly’s path is any easier. Access is simply one barrier. Novo and Lilly have also been working hard to spice up manufacturing capability, but supply has been strained trying to fulfill the demand. A wealthy valuation LLY 1Y mountain Eli Lilly shares over the past yr. But even excellent news about Zepbound’s launch won’t be enough to propel Lilly’s stock higher. Goldman’s Shibutani has a neutral rating on Lilly shares and a price targe of $600, which means shares could fall nearly 5% from they began the week. His expectations are considerably lower than the common analyst price goal of about $653, in response to FactSet. Shibutani’s view speaks to Lilly’s wealthy valuation. While most pharmaceutical firms are inclined to trade at around 18 times earnings and Lilly’s historic average over the past decade is around 22 times, its shares have currently been approaching a multiple of nearly 40 times earnings. While Lilly’s opportunity in obesity treatments steals many of the attention lately, the Indianapolis-based company also has other promising products in its pipeline, leaving some analysts more upbeat in regards to the stock’s outlook and the potential for further upside. Bank of America analyst Geoff Meacham is on this camp. He has a buy rating on Lilly shares, and expects the stock could hit $700 over the subsequent 12 months. Lilly is one among Bank of America’s favorite large-cap biopharma stocks due to its “best-in-class” portfolio, including promising immunology and oncology treatments. Within the near future, the FDA is predicted to approve donanemab, an Alzheimer’s disease treatment. Other potential catalysts for the stock later this yr can be readouts on research Lilly is conducting on tirzepatide because it explores its potential as a treatment for other conditions comparable to non-alcoholic steatohepatitis (NASH), a style of liver disease, and obstructive sleep apnea. These studies could expand the variety of patients who will give you the chance to make use of Mounjaro and Zepbound. ‘A whole lot of angst’ But heading into earnings, next due on Feb. 6, Meacham said there’s often “loads of angst.” One area that might prove trickly is Lilly’s 2024 earnings forecast. Morgan Stanley analyst Terence Flynn said his view was 3% below the common estimate on Wall Street on the time he wrote a Jan. 11 research note, as he expects a “more significant step up” in operating expenses. “We see the arrange for the stock just like the corporate’s 2023 guidance outlook — where revenue was barely ahead of consensus and EPS was below, but investors are generally focused on the top-line growth outlook nearer-term,” said Flynn, who has the equivalent of a buy rating on Lilly shares. Zepbound is tracking above Morgan Stanley’s prior estimates, which prompted Flynn to boost his 2024 sales estimate for the product to $5.5 billion from $3 billion previously. At the identical time, he anticipates that the variety of prescriptions for Trulicity and Mounjaro can be lower than previously forecast. This trend may very well be occurring as patients switch to Zepbound from Mounjaro or Trulicity. Based on Flynn, Lilly has said that a couple of third of Trulicity patients stop taking the drug annually for one reason or one other. By 2025, Flynn estimates Mounjaro and Zepbound supply challenges will ease, allowing Zepbound sales to achieve $11 billion, which is higher than his prior estimate of $5 billion, and the common analyst consensus. Add in Mounjaro and the tirzepatide drugs as a category will reach $23 billion, he said. But even when Lilly shares unload on the earnings news, the investment case is more likely to remain intact because “there’s just such a scarcity of value and growth names like this one,” Meacham told CNBC. “I’d say up to now couple of quarters, the stock has really been under pressure because they’ll disappoint anyone … but the basic case is 100% supported, even with this multiple, so I believe that is why normally the stock sells off, after which the subsequent day greater than makes it up.” —CNBC’s Michael Bloom contributed to this report.