Stock Croc's  Instablog

Stock Croc
Send Message
I am an American trader and a Vanderbilt University alumnus currently living in San Francisco. I'm mostly interested in income investing using dividends, preferred stocks and other debt instruments, and pair trading. I fundamentally analyze every business from the top down. In my personal life,... More
My company:
Stock Croc
My blog:
stockcroc.com
  • Eli Lilly: Don't Miss The Next Upswing 0 comments
    May 29, 2012 11:08 AM | about stocks: LLY

    Transparency / Disclaimer: I was compensated modestly by public relations to write this article. While I have vetted each company, researched it thoroughly and I've done my own due diligence, my due diligence is not a substitute for your own.

    Eli Lilly (NYSE:LLY) is, as compared to several of its competitors in the drug market, doing very well in the present market climate.

    There are a few reasons why I say that. First, while a lot of the company's competitors at the moment are facing problems in terms of rivals to their own drugs, Eli Lilly has had at least one stroke of luck in that regard. A competitor to its blood thinner, Effient, was recentlydenied approval by the FDA. The drug is supposed to prevent heart attacks and strokes in patients with a specific heart ailment. The competing drug, called Xarelto and produced by Johnson & Johnson (NYSE:JNJ) and Bayer , was denied mostly because there was missing data from the trial. About 1000 test subjects withdrew from the trial and, as a result of this, the FDA decided to vote against the approval of the medication. For now, at least, Eli Lilly will not face competition from that sector. However, it is important to note that this is the decision of an advisory panel for the FDA - the FDA does not have to take this advice, so we will have to wait and see for at least a month what the final decision will be.

    Eli Lilly's competitor, Pfizer (NYSE:PFE), could also benefit from the fact that Johnson & Johnson's drug has not been approved. Essentially this means that Pfizer will be able to continue developing its rival to the drug Xarelto without running the risk of competition from Johnson & Johnson. Another company which benefits for similar reasons is Bristol Meyers Squibb (NYSE:BMY). The drug that these two companies are working on is called Eliquis and will effectively have the same effects as the drug being developed by Johnson & Johnson. The two companies have high hopes for the drug and expect it t be a real blockbuster.

    One hot up and comer to watch is ChromaDex (OTC:CDXC), which is a supplier of phytochemical products and ingredients for several industries, including pharmaceuticals, dietary supplement, food and beverage, and cosmetic. The company recently unveiled a new line of dietary supplements, called BluScience, in over 8,000 drug stores across the U.S. The product outperformed forecasted sales by 50% in the first quarter of 2012.

    Eli Lilly and Boehringer Ingelheim Pharmaceuticals announced a new drug that has proven to be effective in treating Type 2 Diabetes in African-American patients. This is exactly the kind of news that we look for from a pharmaceutical company - we want to see it not only working on producing new drugs, but also evidence that those drugs are effective. In combination with a specific diet as well as exercise this new drug will be administered to lower the blood sugar level in African-American patients with Type 2 Diabetes.

    If this drug receives approval than Eli Lilly will surely make a significant profit. The positive results come from a "phase-3 trial of Tradjenta (linagliptin) in which 226 patients with Type 2 diabetes received 5 mg of the drug once per day or placebo".

    What makes this trial notable is that it is the first diabetes trial aimed specifically at African-American patients. This is because Eli Lilly identified the need for a close focus on African-Americans who have been significantly underrepresented in most diabetes studies up until now. It is important to see how African-American patients will respond to such medication. The trial successfully demonstrated the two most important features of any drug: its safety for use and its efficacy in treating the illness specified. African-Americans now have another option to turn to for treating diabetes and can rest safe in the knowledge that this treatment is specifically aimed toward helping their community.

    Another notable aspect of the drug is that it "doesn't require adjustments to dosage regardless of declining renal function or hepatic impairment". Once you're on the drug, you are on it and no changes will need to be made at any point during your treatment.

    So, Eli Lilly is making progress in the drug arena, something which a number of its competitors still need to catch up with if they are to make a significant difference to the market. As things stand, Eli Lilly is one of the better stock options in the pharmaceutical arena at present.

    However, there is one problem facing Eli Lilly. GlaxoSmithKline (NYSE:GSK)will soon announce the results of late stage trials of a diabetes drug of its own that may well be a huge competitor for the company's own drug. Other companies that will most likely suffer if GlaxoSmithKline's drug is effective and approved are Amylin Pharmaceuticals (AMLN),Novo Nordisk A/S, and Sanofi Aventis (NYSE:SNY). This drug will most likely be a niche drug. At this point results are mixed and there is a long way to go until approval is achieved.

    Everyone is in the race to create cancer treatments that will revolutionize medicine. At this point, it seems to me that Sanofi is one of the companies that is closest to achieving this. The company recently announced that it would soon begin testing a new drug that literally starved liver cancer cells to death. The trials will begin next year. The drug will mostly be aimed at the emerging Chinese market where 10% of the population has liver cancer. If it is a successful drug then this hug consumer sector could drastically improve Sanofi Aventis's revenue.

    AstraZeneca (NYSE:AZN) was in the news recently for its collaborative efforts with scientists to find a way to stop drug-related liver injuries. This is something that is of growing concern and is also the main reason behind liver failure and transplants. Drugs that have even small effects on the liver tend to be denied. In many cases, however, the true effects are not realized until after the drug has been marketed, a situation that AstraZeneca is working toward changing as soon as possible by being instrumental in developing new techniques and tools for determining the effects of drugs on the liver well ahead of time.

    Eli Lilly looks poised to rise and stay up for this quarter and possibly beyond. My recommendation is to get in while the getting is good.

    Stocks: LLY
Back To Stock Croc's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.