NEW YORK (TheStreet) -- Shares of Eli Lilly (LLY) - Get Report closed down by 5.14% to $79.74 on Monday afternoon, after the company reached a settlement with healthcare company Sanofi (SNY) - Get Report about patents for Sanofi's top-selling insulin product, Lantus SoloStar.
The settlement, in which Eli Lilly will pay royalties to Sanofi in exchange for a license to certain patents, allows Eli Lilly and German drugmaker Boehringer Ingelheim to sell Basaglar, their version of the injectable insulin, in the U.S. as soon as December 15, 2016, the Associated Press reports.
The FDA granted Eli Lilly and partner Boehringer Ingehleim tentative approval for Basaglar in August 2014, so the companies still need to receive full FDA approval before they can sell the product in the U.S., according to the Associated Press. Basaglar is already available in some European countries, and the companies are seeking approval in additional countries.
Sanofi's Lantus is its top-selling product, and the third best-selling medicine globally, the Associated Press adds.
Eli Lilly, based in Indianapolis, discovers, develops, manufactures and markets products in two segments: human pharmaceutical products and animal health products.
Separately, TheStreet Ratings team rates LILLY (ELI) & CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate LILLY (ELI) & CO (LLY) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LLY's revenue growth has slightly outpaced the industry average of 6.7%. Since the same quarter one year prior, revenues slightly increased by 0.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for LILLY (ELI) & CO is currently very high, coming in at 84.30%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.06% trails the industry average.
- Compared to its closing price of one year ago, LLY's share price has jumped by 28.94%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- LILLY (ELI) & CO's earnings per share declined by 17.6% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, LILLY (ELI) & CO reported lower earnings of $2.23 versus $4.31 in the prior year. This year, the market expects an improvement in earnings ($3.28 versus $2.23).
- You can view the full analysis from the report here: LLY