Core Insights - Eli Lilly (LLY) is actively pursuing acquisitions to enhance its pipeline and drive long-term growth, focusing on cardiometabolic health while also expanding into oncology, neuroscience, and ophthalmology [1][11] Acquisition Details - Lilly announced an agreement to acquire Adverum Biotechnologies for under $300 million, which includes Ixo-vec, a gene therapy for vision loss related to wet age-related macular degeneration [2] - Other notable acquisitions this year include Scorpion Therapeutics for $2.5 billion, SiteOne Therapeutics for $1 billion, and Verve Therapeutics for $1.3 billion, all aimed at strengthening its therapeutic pipeline [3][11] Market Position - Lilly is a strong competitor in the GLP-1 drug market, with its tirzepatide injections experiencing rapid demand growth, which has provided the financial capacity to fund acquisitions [4][11] Industry Trends - The pharmaceutical industry is witnessing an increase in M&A activity, with major players like Novartis, Novo Nordisk, and Pfizer also making significant acquisitions to enhance their innovation pipelines [5][6][7][8] - Recent transactions indicate a shift towards selective, innovation-driven acquisitions rather than broad-scale consolidation, emphasizing long-term growth through precision science [9] Financial Performance - Lilly's shares have outperformed the industry year to date, although the company's valuation is considered high with a P/E ratio of 27.90 compared to the industry average of 15.57 [12][14] - EPS estimates for 2025 and 2026 have seen slight declines, indicating potential adjustments in future earnings expectations [15]

Core Thesis - Costco Wholesale Corporation is positioned positively due to its strategic partnership with Novo Nordisk to sell GLP-1 drugs, which aligns with its low-margin, high-volume business model [2][3][4] Company Overview - As of October 7th, Costco's share price was $914.80, with trailing and forward P/E ratios of 50.34 and 45.87 respectively [1] - The company's pharmacy revenue is growing at approximately 15% year-over-year, indicating strong performance in this segment [3] Strategic Partnership - The partnership with Novo Nordisk will allow Costco to sell Ozempic and Wegovy at $499 per month starting October 2025, enhancing its healthcare offerings [2][3] - This initiative is expected to increase member engagement and potentially boost renewal rates and average spend per member [3][4] Market Positioning - Both Costco and Novo Nordisk are trading at elevated valuations, with Costco around 45x earnings and Novo Nordisk near 40x [4] - The collaboration illustrates the intersection of retail and healthcare, showcasing Costco's ability to leverage its scale and brand trust to enter high-demand categories [4] Historical Context - A previous bullish thesis on Costco highlighted its membership-driven revenue model and operational efficiency, despite a 12.61% depreciation in stock price due to broader market pressures [5]

Core Insights - Eli Lilly (LLY) has signed a definitive agreement to acquire Verve Therapeutics (VERV) for nearly $1.3 billion, enhancing its pipeline with gene therapies targeting heart diseases, including VERVE-102, aimed at reducing cholesterol levels [2][10] - This acquisition marks LLY's third targeted M&A deal in 2025, following a $2.5 billion deal for Scorpion Therapeutics' oncology drug and a $1 billion acquisition of SiteOne Therapeutics to strengthen its neuroscience pipeline [3][10] - LLY aims to diversify beyond GLP-1 drugs by expanding into cardiovascular, oncology, and neuroscience therapeutic areas, which is expected to benefit the company in the long term [3][10] M&A Activity - M&A activity in the pharma/biotech sector has significantly increased in 2025 after a passive 2024, indicating a focus on portfolio expansion and pipeline innovation [5] - Sanofi (SNY) is set to acquire Blueprint Medicines for up to $9.5 billion to enhance its portfolio in rare immunological diseases [6] - Johnson & Johnson acquired Intra-Cellular Therapies for approximately $14.6 billion, adding the antidepressant drug Caplyta to its neuroscience portfolio [7] Stock Performance and Valuation - LLY's shares have risen 1.7% this year, outperforming the industry, which has declined by 1.2%, as well as the S&P 500 index [8] - The stock currently trades at a price/earnings ratio of 30.06, higher than the industry average of 15.05, but below its five-year mean of 34.54 [12] - Earnings estimates for LLY have declined for 2025 from $23.06 to $21.95 per share and for 2026 from $31.15 to $30.91 over the past 60 days [15]