By Bhanvi Satija and Mariam Sunny
(Reuters) -Eli Lilly on Tuesday raised its annual forecasts as demand for new diabetes drug Mounjaro surges ahead of a decision on its use as a weight-loss treatment, with shares soaring 18% to a record high also helped by positive data from a rival drug.
The U.S. company's shares had climbed 24% this year ahead of the results and the day's rally puts it on track to become the world's most valuable healthcare firm by market capitalization by overtaking health insurer UnitedHealth (NYSE:UNH).
Much of the rally has been powered by investor bets on Mounjaro's potential as a weight-loss treatment and Lilly's experimental drug donanemab for Alzheimer's.
Mounjaro's sales jumped 72.3% to $979.7 million in the second quarter from the prior quarter, easily topping analysts' estimates of $743 million.
The beat shows patients using Mounjaro switched from Lilly's savings program - in which the drug was being provided at a reduced price - to commercial insurance plans that pay a higher reimbursement rate, said BMO Capital Markets analyst Evan Seigerman.
Lilly expects a U.S. decision on the use of the drug in obesity patients later this year. Mounjaro is already being prescribed by doctors off-label as an obesity treatment.
Investors also cheered after Novo Nordisk (NYSE:NVO) said its obesity treatment, Wegovy, reduced the risk of a major cardiovascular event like a stroke by 20% in a closely watched late-stage study. That is significantly better than the 15% to 17% expected by investors and analysts.
The data on heart benefit could help weight-loss treatments gain wider health insurance coverage and tap into a broader market of patients, analysts said.
"Until now, these medicines were only weight-loss drugs but now they are much more than that," said Wells Fargo (NYSE:WFC) analyst Mohit Bansal.
Lilly raised its adjusted 2023 earnings forecast by $1.05 to be between $9.70 and $9.90 per share and its revenue range expectations by $2.2 billion at both ends to $33.4 billion and $33.9 billion.
Excluding items, second-quarter earnings of $2.11 per share beat estimates of $1.98, as per Refinitiv data.
Sales of $8.31 billion also topped estimates of $7.58 billion.