While rivals Pfizer and Moderna scoop up millions in vaccine profits, Lilly is about to show its hand

A pandemic that has shaken the world has not been kind to pharmaceutical giant Eli Lilly and Co.

While rivals Pfizer Inc. and Moderna Inc. have scooped up millions of dollars in profits from their COVID-19 vaccines, Indianapolis-based Lilly passed up the chance to develop a vaccine and instead focused on making antibody treatments for patients who were already infected with the coronavirus.

But it turned out to be a financial whiff, as sales of the antibodies fell in the first quarter and the drugs piled up in hospital refrigerators around the country.

Now all eyes will be on Lilly’s second-quarter earnings, which the company will release early Tuesday.

The company’s first-quarter results, announced in April, were a disappointment for people expecting the company’s COVID-19 drugs to score big profits.  Lilly sales from the antibodies were lower than expected due to weak demand. That forced the company to lower its full-year sales and earnings guidance.

Demand has sputtered, chiefly due to the narrow window to give patients the IV infusion (the drugs need to be administered within 10 days of a positive test) and the reluctance of patients to sit for several hours for an infusion and follow-up observation.

Around Indianapolis, several hospitals that set up infusion clinics early this year have already taken them down due to lack of demand. Clinics operated by or affiliated with Indiana University Health, Community Health, Franciscan Health and Eskenazi Health shut down in late April.

Lilly said earlier this year that bamlanivimab should no longer be given to patients alone because treatment combinations work better fighting some virus variants.

At the same time, it recommended that care providers use bamlanivimab along with another one of its drugs, etesevimab.

In late spring, federal regulators halted the distribution of Lilly’s combination of the two antibodies—bamlanivimab and etesevimab, which are administered as a cocktail infusion—in Indiana, Arizona, California, Florida, Oregon and Washington. The government had previously paused the Lilly cocktail in Illinois and Massachusetts.

In April, the FDA revoked its emergency-use authorization for Lilly’s bamlanivimab, when administered alone, at the drugmaker’s request, after studies showed it was not effective as a solo treatment for COVID variants.

As a result, the government terminated an earlier purchase agreement for bamlanivimab alone, and orders were canceled for the remaining 350,856 doses scheduled for delivery.

The combined effect of all those actions has dealt Lilly a multiple whammy. In late April, the drugmaker lowered its full-year sales forecast for COVID antibodies to a range of $1 billion to $1.5 billion, down from an earlier range of $1 billion to $2 billion.

Will Lilly disappoint investors again on Tuesday? Some analysts are not expecting a big turnaround.

“Overall, second-quarter results of Lilly are likely to reflect continued negative impact from the pandemic though trends are expected to be better as economies have re-opened and vaccinations continue in full swing,” according to Zack’s Equity Research.

Perhaps Lilly executives will point to new signs of COVID-19 revenue. Last week, the Food and Drug Administration broadened emergency use of another Lilly drug, baricitinib, to treat patients hospitalized with COVID-19 and requiring supplemental oxygen. (Baricitinib was originally launched in 2018 with a black box safety warning to treat arthritis.)

It seems like a relatively small opportunity for Lilly, compared to the revenue gusher for vaccines made by drugmakers Pfizer and Moderna.

In the first quarter, Pfizer rang up $3.5 billion in revenue from its COVID-19 vaccine, nearly a quarter of its total revenue. The vaccine also generated hundreds of millions in profits.

Moderna brought in $1.7 billion in sales of its COVID-19 vaccine in the first quarter, and posted its first-ever operating profit.

Can Lilly get a grip on the pandemic? Tuesday’s results should reveal a lot about that.