(Bloomberg) -- Eli Lilly & Co.’s shares soared as its brighter outlook for 2024 raised the potential ceiling for new weight-loss drugs even further in the eyes of analysts and investors.

Supply and pricing for Zepbound and the diabetes treatment Mounjaro, both now in shortage, will improve later this year, Indianapolis-based Lilly said Tuesday. The company lifted the top end of its annual sales forecast by $2 billion, even as most of its key drugs, except Zepbound, missed estimates for the quarter. 

The stock gained as much as 7.9%, the most intraday since August, and has nearly doubled over the past 12 months. Shares of obesity drug rival Novo Nordisk A/S gained 2% in Copenhagen. 

Lilly’s quarterly results showed its reliance on the success of its anti-obesity medications. A key diabetes drug missed estimates as the drugmaker prioritized Zepbound, and a highly anticipated Alzheimer’s therapy isn’t progressing as expected.

But patients can’t get enough of weight-loss drugs from Lilly and Novo, and both are leaving sales on the table thanks to supply shortfalls. Bloomberg Intelligence’s estimate for $80 billion in annual obesity drug sales by 2030 is now looking conservative, analyst Michael Shah said. Current launch trends, positive readouts for some pipeline drugs, and prescriber feedback suggesting longer treatment duration for the medications all point to an expanding picture, he said.

Concerns Alleviated

Going into the earnings report, investors were concerned about Lilly’s ability to keep pace with demand, with Zepbound predicted to remain in shortage into the second half of the year. The company’s forecast alleviated those worries for now. 

“We’re kind of firing on all cylinders here to ensure that we get more supply to patients,” Chief Financial Officer Anat Ashkenazi said in an interview. Still, she said “it will be some time” before the company is able to meet demand for Mounjaro and Zepbound.

Read More: Lilly’s Zepbound Outage Deepens as Almost All Doses Short

Adjusted earnings for 2024 will be $13.50 to $14 a share, the Indianapolis-based company said, up from the earlier range of $12.20 to $12.70. The year’s revenue will be as high as $43.6 billion.

The first-quarter sales shortfall — revenue of $8.77 billion missed estimates by $160 million — reflects a lack of capacity rather than a problem with product demand, BMO’s Evan Seigerman said in a note, calling it a “high-quality miss.” 

Weight-Loss Battle

Lilly and Novo have been locked in a battle to dominate the weight-loss drug market, with both trying to boost output as demand continues to outstrip supply. Lilly’s Zepbound fetched $517 million in the quarter, far ahead of Wall Street’s expectations, even as nearly all doses were in shortage.

Over the last four years, Lilly has expanded facilities in North Carolina to create more production capacity for diabetes and weight-loss drugs. One of those plants will begin producing for the market later this year, with others coming online beginning in 2025. The company also said earlier this month that it had bought another manufacturing plant in Wisconsin that could begin production at the end of 2025.

Read More: Lilly’s New $2.5 Billion Plant to Boost Obesity Drug Supply 

Lilly has linked its supply issues to the complicated process of making the plastic pens used to inject the drugs. Some patients have been calling for Lilly to distribute single-use vials of Zepbound and Mounjaro to help ease shortages. Lilly has been using vials, as well as multidose pens, in some markets outside of the US to help extend supply. 

Alzheimer’s Delay

The weight-loss success is overshadowing other problems at Lilly, such as delays in gaining US clearance for its experimental Alzheimer’s disease treatment. In March, just before regulators were supposed to decide whether to approve the drug, called donanemab, Lilly said the Food and Drug Administration was calling a last-minute meeting with external advisers to discuss its safety and efficacy. 

Lilly expects the meeting to be scheduled for some time this summer, Ashkenazi said. The company remains “incredibly confident” in donanemab’s potential, Lilly’s head of neuroscience Anne White said on a call with investors.

Donanemab removes a toxic protein called amyloid from the brains of Alzheimer’s patients and helped slow cognitive decline in a large trial. In studies, side effects included brian swelling and brain bleeding, and regular monitoring is required to detect these issues early before they cause problems. 

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