Another R&D Failure for Eli Lilly - Analyst Blog


Eli Lilly and Company ( LLY ) suffered another pipeline setback with the company reporting that its phase III depression candidate, edivoxetine, failed to meet the primary endpoint in three studies. Edivoxetine failed to show superiority over placebo in the three acute randomized placebo-controlled phase III studies (LNBM, LNBQ and LNBR).

Although the safety and tolerability profile was similar to that seen in earlier studies, Eli Lilly said that the efficacy profile did not support regulatory filings for the use of edivoxetine as an add-on treatment in patients with major depressive disorder (MDD).

Given these disappointing results, Eli Lilly has decided that it will scrap the development of edivoxetine as an add-on treatment for depression. An ongoing study evaluating the long-term maintenance effect of edivoxetine will, however, continue.

Eli Lilly expects to take a charge of 1 cent in the fourth quarter related to the discontinuation of the development of edivoxetine for the MDD indication. Eli Lilly maintained its 2013 reported earnings guidance of $4.33 - $4.38 per share. Adjusted earnings guidance is $4.10 - $4.15 per share.

Our Take

Like many of its peers, Eli Lilly is facing stiff generic competition and its pipeline needs to deliver to make up for the revenues lost to generic competition. The phase III results on edivoxetine are disappointing and mark another late-stage failure for Eli Lilly.

Some pipeline failures in the past few months include the termination of the development of oncology candidate, enzastaurin, the termination of a mid-stage study being conducted with Alzheimer's disease candidate, LY2886721, Alimta's failure to achieve the primary endpoint in the randomized, open-label phase III superiority study - PRONOUNCE and the discontinuation of the phase III rheumatoid arthritis program for tabalumab.

On the brighter side, the Animal Health business should offer some downside support. We are also pleased to see Eli Lilly pursuing small acquisitions and in-licensing deals to boost its pipeline. Share buybacks and cost control should help Eli Lilly achieve its 2013 guidance despite the presence of generic competition for key products.

Eli Lilly is a Zacks Rank #3 (Buy) stock. Some better-ranked stocks in the pharma/biotech sector are Actelion Ltd. ( ALIOF ), Bayer ( BAYRY ) and Acorda Therapeutics ( ACOR ). While Actelion is a Zacks Rank #1 (Strong Buy) stock, Bayer and Acorda are Zacks Rank #2 (Buy) stocks.

ACORDA THERAPT (ACOR): Free Stock Analysis Report


BAYER A G -ADR (BAYRY): Free Stock Analysis Report

LILLY ELI & CO (LLY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ACOR , ALIOF , BAYRY , LLY , MDD

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