Analyst Note| Damien Conover, CFA |
Eli Lilly’s announcement of filing Alzheimer’s drug donanemab based on phase 2 data along with the lower bar signaled for Alzheimer’s drug approvals, as shown by Biogen’s Aduhelm approval, led us to increase our expected peak annual donanemab sales to over $9 billion (up from over $2 billion), driving our fair value estimate to $215 from $180. Eli Lilly announced a shift in filing strategy for donanemab, likely due to the recent approval of Aduhelm. Since Aduhelm gained approval based on one successful study, we believe the probability that donanemab will be approved is 85% based on the successful phase 2 Trailblazer study. Adding donanemab to Lilly’s portfolio should reinforce the company’s wide moat.