Another Setback for Lilly

Eli Lilly and Company (LLY - Analyst Report) suffered yet another pipeline setback recently with Alimta failing to achieve the primary endpoint (overall survival) in the phase III POINTBREAK trial.

The study was conducted in patients suffering from nonsquamous non-small cell lung cancer (NSCLC). Patients were randomized to receive Alimta plus Roche’s (RHHBY) Avastin and carboplatin induction followed by maintenance therapy with the Alimta-Avastin combination or paclitaxel plus Avastin and carboplatin followed by maintenance therapy with Avastin.

Results showed that median overall survival in the Alimta arm was 12.6 months compared to 13.4 months in the paclitaxel arm. The Alimta arm, however, showed a statistically significant improvement in progression-free survival (6.0 months versus 5.6 months).

This is the latest in a series of pipeline setbacks faced by Eli Lilly over the past few weeks. The company had recently announced that it is shelving its plans for the phase III development of its schizophrenia candidate, pomaglumetad methionil (mGlu2/3).

Eli Lilly’s decision to discontinue phase III development of the candidate was based on an independently conducted futility analysis, which indicated that the candidate would fail to achieve its primary endpoint in the HBBN study.

The announcement regarding the discontinuation of phase III development of pomaglumetad methionil came shortly after Eli Lilly and Daiichi Sankyo Company, Limited presented data on Effient (prasugrel) from a head-to-head phase III study -- TRILOGY ACS (TaRgeted platelet Inhibition to cLarify the Optimal strateGy to medicallY manage acute coronary syndromes).

Results showed that Prasugrel plus aspirin failed to achieve statistical significance compared to Sanofi’s (SNY - Analyst Report) Plavix (clopidogrel) plus aspirin in the study that was conducted in patients with unstable angina (UA) or non-ST elevation myocardial infarction (NSTEMI), who did not undergo an artery-opening procedure.

The study results were disappointing as positive data would have allowed Eli Lilly to seek approval for expanding Effient’s label. Effient is currently approved by the US Food and Drug Administration (FDA) for the reduction of the rate of thrombotic cardiovascular events in patients with acute coronary syndrome (ACS) who are to be managed with an artery-opening procedure.

Meanwhile, in August, Eli Lilly reported top-line results on its phase III Alzheimer’s candidate, solanezumab. Results showed that solanezumab failed to meet its primary endpoints in both the phase III EXPEDITION studies. However, the candidate demonstrated promising potential in slowing cognitive decline.

Neutral on Eli Lilly

We currently have a Neutral recommendation on Eli Lilly. The biggest near-term challenge for the company will be to replace the revenues lost to generic competition now that Zyprexa has lost US and EU exclusivity.

We expect the top- and bottom-line to remain under pressure as the contraction in Zyprexa sales more than offsets growth in Cymbalta, diabetes and new product sales. The pipeline setbacks are also disappointing and will make it all the more challenging for the company to replace revenues.

On the other hand, the Animal Health business and the diabetes franchise should provide some downside support. We are also pleased to see Eli Lilly pursuing small acquisitions and in-licensing deals to boost its pipeline. Eli Lilly currently carries a Zacks #2 Rank (short-term Buy rating).