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Eli Lilly Beats, Raises Guidance

Sales of depression drug Cymbalta climb 47%, boosting overall revenue.

Eli Lilly

(LLY) - Get Report

beat third-quarter estimates on an adjusted basis and raised fourth-quarter and full-year guidance on Thursday in addition to announcing a new licensing agreement for type I diabetes candidate Teplizumab.

Earnings increased 6% to $926.3 million, or 85 cents a share, compared with $873.6 million, or 80 cents a share, in the comparable 2006 period. Third-quarter 2007 reported results include a charge of 6 cents a share for a reduction in expected insurance recoveries.

Adjusted net income rose 20% to $996.4 million, or 91 cents a share, compared with $832 million, or 77 cents a share, a year earlier.

Analysts surveyed by Thomson Financial were expecting 87 cents a share on revenue of $4.5 billion.

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Revenue increased 19% to $4.59 billion from $3.86 billion a year ago. Sales of depression drug Cymbalta climbed 47% to $513.2 million on strong demand and foreign exchange rates.

Looking ahead, Lilly raised fourth-quarter guidance for adjusted earnings to 86 cents to 91 cents a share, excluding a 3-cent-a-share charge for research and development expenses related to a licensing agreement announced Thursday and mentioned below. The company now expects full-year pro forma adjusted earnings in the range of $3.50 to $3.55 a share, or $2.76 to $2.81 a share on a reported basis.

Also on Thursday, Lilly announced a deal with MacroGenics to develop and commercialize Teplizumab for autoimmune diseases. Lilly will acquire exclusive rights to Teplizumab, which is currently in a phase II/III clinical trial for patients with onset type I diabetes.

Lilly will make an initial payment of $41 million and $3 million in other committed funds. MacroGenics could also receive up to $200 million tied to development milestones for type I diabetes indication, and $250 million in sales milestones and royalties.

Also, Lilly will be able to make an equity investment of up to $10 million in MacroGenics' next private financing round or initial public offering, and has the right to pursue additional indications for Teplizumab and other molecules that are co-developed -- milestones of those could exceed $600 million. The transaction is expected to go into effect in the fourth quarter. Lilly expects to record a charge of 3 cents a share in the fourth quarter related to the agreement.

Shares were up a nickel, or about 1%, at $57.