A pharmaceutical manufacturing facility of Eli Lilly and Company is shown at 50 ImClone Drive, Branchburg, New Jersey. March 5, 2021.
Mike Segar | Reuters
This article was first sent to Jim Cramer’s CNBC Investing Club members. For the most up-to-date updates, subscribe to our email list subscribe here.)
Just before the close bell we’ll be purchasing 50 shares Eli Lilly (LLY) at roughly $255. After the trade, the Charitable Trust owns 375 Eli Lilly shares. The portfolio’s Eli Lilly weight will be increased by this purchase, from 2.01% to 2.3%.
On Monday, shares of Eli Lilly were trading down along with several large pharma companies. This slight pullback could be an opportunity for us to increase our position.
We have not changed our thesis at Eli Lilly. wrote last Monday. With its focus on diabetes, Eli Lilly has been one of the most well-run companies in the industry. Its portfolio is able to deliver growth with minimal loss of exclusivity. However, the numbers on the bottom line are just one aspect of this story. Eli Lilly has an impressive track record in increasing margins through efficiency.
Looking long-term, Eli Lilly’s pipeline excites us most. Eli Lilly is a company with two assets. CEO David Ricks declared last month that these are the “two most valuable projects and perhaps the most lucrative projects currently in the industry.”
Ricks talks about two projects: Donanemab, a drug that can be used to treat Alzheimer’s disease and Tirazide in Type 2 Diabetes. Analysts estimate that both assets could be worth $10 billion, which will support growth over the years.
Analysts at BMO Capital referred to donanemab as a $10 billion potential opportunity in the coverage of Eli Lilly’s initiation on November 18, when they called it a possible business opportunity worth up to $10 billion if there are no access barriers. In a JPMorgan October research note, analysts said tirzepatide was a potential $10 billion plus opportunity for type 2 diabetes. This could potentially add up to multi-billions in obesity.
Tirazide and Donanemab are the focus of our attention as both will be approved next year. We aim to have a fully-fledged position at Eli Lilly before these separate catalyst events.
We believe LLY is a great opportunity to purchase more shares, with 2022 looking like a year full of product launches and approvals.
My Charitable Trust now has an official home at the CNBC Investing Club. You can view every portfolio move and receive my market insights before everyone else. Action Alerts Plus is not affiliated in any way with the Charitable Trust or my writings.
Subscribers to CNBC Investing Club will get a trade alert prior to Jim making a trade. Jim usually waits approximately 45 minutes to send a trade alert before purchasing or selling any stock within his charitable trust portfolio. Jim will wait five minutes until the market opens to execute a trade if the trade alert has been sent before the trade is executed. Jim executes trades if issued within 45 minutes of market opening. Jim can wait 72 hours before execution if the alert is issued after he’s spoken on CNBC TV about a stock. See here for the investing disclaimer.
(Jim Cramer’s Charitable Trust has been LLY.