Lilly, Vertex top pharma performers in H1; Moderna, Pfizer the worst

Buoyed by booming sales of its diabetes drugs, Eli Lilly (NYSE:LLY) was the best performing large pharma or biotech in H1 2023, returning an impressive 28%.

Coming in second, Vertex Pharmaceuticals (VRTX), helped by continued strong revenue from its cystic fibrosis portfolio, returned ~23%.

In third, Denmark-based Novo Nordisk (NVS), which is focused on diabetes treatments, was up ~18%.

In the first half of the year, the Dow Jones Industrial Average (DJI) finished up ~4%, the S&P 500 (SPX) is up ~16%, the Nasdaq (COMP.IND) is up ~33%.

Rounding out the top 5 performing pharmas and biotech in H1 2023 were Sanofi (SNY) and Biogen (BIIB).

Lilly’s (LLY) strong 2023 is the result of continued strong sales of its diabetes portfolio, including its newest treatment, Mounjaro (tirzepatide), which had $568.5M in sales in Q1 alone. Sales of the company’s best selling drug, the diabetes medication Trulicity, rose 14% year over year to ~$1.98B in the quarter.

Lilly is poised for further gains in the second half. Besides a possible indication for Mounjaro as a weight loss treatment, it could also see approval of donanemab for Alzheimer’s disease by the end of the year.

The pharma also reported on June 26 strong results for its newest weight loss candidate, retatrutide.

Vertex’s (VRTX) success is the result of its cystic fibrosis portfolio, which dominates the market for that disease. Its best-selling therapy for the condition, Trikafta (elexacaftor/tezacaftor/ivacaftor and ivacaftor), also known as Kaftrio in the EU, achieved ~$2.1B in sales in Q1, a 19% increase from the year-ago period.

While the company CF medicines are certainly growth drivers, Vertex (VRTX) isn’t resting on its laurels. A phase 3 study on VX-548 for the treatment of acute pain is expected to complete by the end of the year and its partnership with CRISPR Therapeutics (CRSP) for gene therapy exa-cel for sickle cell disease and transfusion-dependent beta-thalassemia could also reap dividends in the near future.

Novo Nordisk (NVO), like Lilly (LLY), can attribute their good fortune to sales in its diabetes franchise. However, Novo (NVO) has another drug that has aided their success so far this year, the approved weight loss therapy Wegovy (semaglutide).

In Q1, Wegovy had sales of ~DKK4.6B (~$668.7M), representing 225% growth from Q1 2022.

On the other end of the spectrum, Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE), among the best performing stocks of 2022 and 2021 due to the COVID-19 pandemic, are at the bottom of the pharma pack in the first half, down, respectively, ~32% and ~28%.

Four out of the five worst performing pharma and biotech stocks of the first half of the year had significant investments in COVID-related vaccines or therapies. Coming in at No. 3 worst performer is Pfizer (PFE) COVID vaccine partner BioNTech (BNTX), down ~27%, while Novavax (NVAX), also known for its COVID shot, off ~24%, was the fifth worst performing pharma or b iotech.

Despite its poor first half performance, UBS recently upgraded Moderna (MRNA) to buy citing its underappreciated pipeline. Meanwhile, Credit Suisse recently cut Pfizer (PFE) to neutral noting limited pipeline catalysts. However, Seeking Alpha contributor Nathan Aisenstadt recently argued that Pfizer’s (PFE) future is bright given drug and vaccine approvals received in 2023 so far.

Organon (NYSE:OGN) came in as the No. 4 worst performer, down ~26%, as its Q1 results left a lot to be desired. However, things might improve for the Merck spinoff following its recent launch of a Humira biosimilar.