Eli Lilly and Company (LLY) recently received a complete response letter (CRL) from the US Food and Drug Administration (FDA) for its New Drug Application (NDA) for Amyvid (florbetapir F 18 injection).
Amyvid is a molecular imaging agent that has been designed to help detect amyloid plaque in the brain, which is associated with Alzheimer’s disease. The FDA said that the company needs to implement a reader training program which will help ensure accurate and consistent interpretation of existing Amyvid scans.
The complete response letter does not come as a surprise as, earlier this year, the FDA’s Peripheral and Central Nervous System Drugs Advisory Committee had voted against granting approval to Amyvid based on currently available data.
While the panel voted 13-3 against granting approval, it was unanimously (16-0) in favor of approving Amyvid on the condition that the company has a reader training program in place. The program should demonstrate reader accuracy and ensure consistency through a re-read of previously acquired scans.
While Eli Lilly did not provide any details as to when it expects to submit a response to the FDA, the company should not face too many problems in setting up a training program as it has been working on addressing the questions raised by the advisory panel.
Amyvid became a part of Eli Lilly’s portfolio with its December 2009 acquisition of privately-held company, Avid Radiopharmaceuticals, Inc. At the time of acquisition, Eli Lilly made an upfront payment of $300 million. In addition to this upfront payment, Eli Lilly may have to pay up to $500 million on the achievement of certain regulatory and commercial milestones related to Amyvid.
Focus on Alzheimer’s
Amyvid’s approval would provide Eli Lilly with a near-term revenue source. Moreover, it should fit well in Eli Lilly’s product portfolio as the company itself has been pursuing the development of treatments for Alzheimer’s disease.
The worldwide Alzheimer’s disease market represents huge commercial potential with companies like Pfizer (PFE) and Johnson & Johnson (JNJ) working on developing treatments for the disease. Eli Lilly currently has a phase III Alzheimer’s disease candidate, solanezumab, in its pipeline.
Solanezumab is a novel Alzheimer’s disease candidate in that it is being developed to attack amyloid-beta, protein fragments that form the plaque that builds up on the brains of Alzheimer’s disease sufferers. Amyvid, which has been designed to help detect amyloid plaque in the brain, could help in the early detection and treatment of Alzheimer’s disease.
Neutral on Eli Lilly
We currently have a Neutral recommendation on Eli Lilly, which is supported by a Zacks #3 Rank (short-term Hold recommendation). We expect the top-and bottom-line to remain under pressure from late 2011 as the contraction in Zyprexa sales more than offsets growth in Cymbalta, diabetes and new product sales. Barring significant cost-cutting efforts or additional revenue catalysts, 2013 will be the beginning of a very challenging period with Cymbalta losing US patent protection during the year.
On the flip side, strong performance of the diabetes business should offer some downside support. The ramp of Effient and upside from the ImClone deal could also result in a short-term boost to revenue. We are also pleased to see Eli Lilly pursuing small acquisitions and in-licensing deals to boost its pipeline.
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