What Happened?
Shares of global pharmaceutical company Eli Lilly (NYSE:LLY) fell 7.4% in the morning session after the company discontinued three clinical pipeline assets, including a gene therapy for dementia acquired through a billion-dollar deal.
The scrapped asset, LY3884963, aimed to treat frontotemporal dementia and was part of the $1.04 billion acquisition of Prevail Therapeutics. A spokesperson for Lilly confirmed the move was “due to a lack of compelling efficacy,” not safety concerns. The company also stopped development of a CD19 antibody, LY3541860, and a radioligand therapy, 225Ac-PSMA-62.
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What Is The Market Telling Us
Eli Lilly’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 24 hours ago when the stock gained 10% on the news that the company reported fourth-quarter 2025 results that beat Wall Street expectations and issued an upbeat forecast for 2026, driven by high demand for its weight-loss drugs.
The pharmaceutical company's revenue grew 42.6% year-over-year to $19.29 billion, surpassing analysts' estimates. Adjusted earnings per share came in at $7.54, which was also well above expectations. This strong performance was fueled by soaring sales of its popular weight-loss and diabetes drugs, Zepbound and Mounjaro. Looking ahead, Eli Lilly provided a positive outlook for 2026, forecasting revenue of $81.5 billion at the midpoint and adjusted earnings per share of $34.25 at the midpoint. Both projections were higher than what analysts had predicted.
Eli Lilly is down 4.3% since the beginning of the year, but at $1,034 per share, it is still trading close to its 52-week high of $1,110 from November 2025. Investors who bought $1,000 worth of Eli Lilly’s shares 5 years ago would now be looking at an investment worth $5,123.
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