Lilly spent $18.2 billion on its next franchise. Its own filing lists what failed.
Eli Lilly's third-quarter filing both raises guidance to $91-92 billion and lists the experimental drugs it killed, including its phase 2 Alzheimer's candidate mevidalen. With $18.2 billion spent on acquisitions in nine months and December 7's Innovation event ahead, the pipeline table is the document that prices the stock at 34 times earnings.
Vincent Jiang · 3 min read
Mevidalen did not clear the bar
Mevidalen, an experimental Alzheimer's drug Eli Lilly+0.73% — Eli Lilly, up 0.73 percent today had been testing in 304 patients with mild-to-moderate disease dementia, is out 13. The company's third-quarter filing lists it as "removed from pipeline," and a Lilly spokesperson told Fierce Biotech the program "did not meet our high internal bar for success" 13. It is the drug's second strike: in 2021 it missed its primary and secondary cognitive endpoints in a phase 2 trial in Lewy body dementia 3.
Almost nobody outside the industry press noticed, and that is the point. The same filing carries the price of everything Lilly bought to replace drugs like it.
The engine paying for the rebuild
The quarter itself was enormous. Revenue hit $24.4 billion, up 39% from a year earlier, on volume growth of 53% that outran a 15% slide in realized prices, and Lilly raised full-year revenue guidance to $91 to $92 billion from $85 to $87 billion 12.
The stock touched a record high on October 30 and now sits near $1.1 trillion, at about 34 times forward earnings against a five-year average of 40 4. But tirzepatide, the molecule behind Mounjaro and Zepbound, made 65% of first-half revenue, and generic makers filed to sell copies of both drugs in July 14.
Buying the next franchise three ways
So Lilly is buying a second franchise. Per the quarterly filing, it paid $18.2 billion in cash on business development in the first nine months of 2026, taking in AtaiBeckley, Orna Therapeutics and Centessa Pharmaceuticals 1. Fierce Biotech counts $6.3 billion upfront for Centessa in June and $2.8 billion upfront for AtaiBeckley, closed in September 3. Merida Biosciences closed in October for up to $2.87 billion in upfront and milestone payments 1.
The three deals disclosed so far account for $11.9 billion of the $18.2 billion
- Estimate
Data
| Value | |
|---|---|
| Centessa (June) | $6.3B |
| AtaiBeckley (September) | $2.8B |
| Merida (October) (estimate) | $2.87B |
The fees Lilly pays AI labs for discovery tools sit outside that line and are undisclosed; neither Lilly nor Novo Nordisk+5.42% — Novo Nordisk, up 5.42 percent today has an approved AI-designed drug, as The Inference reported on November 3 1. Meanwhile Lilly has stopped disclosing its phase 1 programs, so the public record of failures starts only where the filing chooses to list them 1.
What the filing says failed
The removals run across four fields: mevidalen in Alzheimer's, the anti-CD19 antibody LY3541860 stopped in multiple sclerosis and rheumatoid arthritis, the early obesity candidate LY4064912 terminated after a small phase 1 trial, and gene therapies LY3884963 and LY3884961 dropped 1. Industry data quoted in the same report puts clinical development disruptions at 43% for cell and gene therapy programs against 29% for monoclonal antibodies, with 17% of those disruptions efficacy-related 1. The heaviest buying, in other words, is flowing into the hardest science.
Quarterly revenue has doubled in two years, and tirzepatide is still two-thirds of it
Quarterly revenue doubled in two years, and tirzepatide is still two-thirds of it
Data
| Revenue | |
|---|---|
| Q2 '24 | $11.3B |
| Q3 '24 | $11.4B |
| Q4 '24 | $13.5B |
| Q1 '25 | $12.7B |
| Q2 '25 | $15.6B |
| Q3 '25 | $17.6B |
| Q4 '25 | $19.3B |
| Q1 '26 | $19.8B |
| Q2 '26 | $23B |
| Q3 '26 | $24.4B |
The bulls have a case
RBC Capital Markets raised its 2026 revenue forecast to $91.2 billion this week and called itself "bullish heading into" Lilly's Innovation event on December 7 1. Lilly's Key Products in immunology, oncology and neuroscience doubled year over year in the quarter 2.
Rival Novo Nordisk reported the same week that its reported operating profit fell 9% at constant currency on DKK 8.7 billion of impairments, including DKK 4.6 billion against the kidney drug ziltivekimab 5. Setbacks are the cost of running a portfolio, and Lilly is paying for its pipeline with a quarter most large pharma would call a career.
The December 7 test
At its Innovation event on December 7, Lilly management sets long-term margin and spending targets, one week after Novo wrote off DKK 8.7 billion, and with one new global commercial chief, Ilya Yuffa, seated from January 1 to sell whatever the pipeline produces 56. An investor paying 34 times earnings is buying the disclosed record, not the pitch: $18.2 billion in, a removal table out 56. Judge the December targets on the table.
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