Rob Sechan, Managing Partner, New Edge CapitalEli Lilly & Co.LLYBUYAug 19, 2022

Better product than NVO. So he'd be buying this one (but not at today's price ;)

Their earnings and drugs are coming through. They have momentum and are building factories to produce their GLP-1 weight-loss drug. Is a huge holding for him.

Clear leader in diabetes and weight loss. Other players are coming in, but this name is ahead of the curve. Very strong earnings growth over next few years (50% for 2026, 22% for 2027, 17% for 2028). Reliable aspects of a pharmaceutical healthcare name, plus very strong earnings growth.

RSI is 70, so wait for a bit of a pullback.

Largest pharma company in the US, and possibly the world. Breaking out to fresh all-time highs. Leading GLP-1 drugs. 150-year history of healthcare innovation. 

Obesity + diabetes comprise ~55% of revenues, and growing fast. Also into oncology, immunology, neuroscience, and more. Well-insulated from patent cliffs. 80% of marketed drugs are "biologic", which stand up better to generic competition. Prolific FCF. M&A frenzy this year on top of pretty robust R&D. Yield is 0.61% (growing 15% compound pace over last 5 years, should continue).

Has owned a long time in the growth fund. It is a leader in GLP 1. Every year the weight loss drugs seem to be able to treat another condition so it is a bit of a miracle drug. Is still early for these drugs. It is expensive so if you want something else you could try Thermo Fisher for broad exposure. The health care sector still has an overhang from Covid and the US government has pulled back on spending.

His preference in the space.

NVO chart's under pressure. Where are we in the saturation cycle for GLP-1 penetration? Also, what will the price/volume dynamics be, since NVO kicked off a price war?

LLY has the better position in terms of branded drugs. Hasn't pulled the trigger on either.

He likes their just-announced purchase of Centessa, which makes drugs to tackle narcolepsy, drug/alcohol addiction and mood disorders.

What we're seeing now are expectations settling after a very strong runup. Still at the centre of the biggest shift in healthcare. Keeps expanding its opportunities and taking market share.

Winning the weight-loss drug war. Active pipeline.

Likes pharma and has long owned several such stocks. Between LLY and NVO, their competitor, it is a zero-sum race that LLY is winning in the weight-loss drugs. LLY has always been expensive. He likes Amgen for its GLP-1 drug (still pending approval).

They beat earnings and shares jumped over 10% today. They have a partnership with Nvidia to treat hard-to-defeat diseases. With this firepower, they will succeed.

 It reports Wednesday. What drives this stock are new drug trials of its weight-loss drug. If they announce new data, shares could move.

The street is passing on this because it has a much higher PE now, making it too risky.

Breaking out to new highs. Bit more diversified than NVO, and a bit more stable. Supposed to come out with pill form for weight loss sometime this year. Well above 200-day MA, which is starting to push higher. Prefers this name.

NVO is more focused on 2 areas:  diabetes and weight loss. Recently announced pill version for weight loss, and that's very positive. Valuation's quite cheap. Competitive pricing, regulatory scrutiny. Trades at 17x PE, but earnings growth forecast looks cloudy for next couple of years. Might be building a base, but still a tad below 200-day MA.

Both have signed agreement with US government for expansion in Medicare, albeit with lower pricing.