Eli Lilly’s (LLY) oncology pipeline suffered a setback recently with the company reporting disappointing results on Alimta from a phase III study. Data, presented at the annual meeting of the European Society for Medical Oncology (ESMO), showed that Alimta failed to achieve its primary endpoint in a phase III study that was being conducted in patients suffering from recurrent or metastatic squamous cell cancer of the head and neck (SCCHN).
The study was conducted with 795 patients who received treatment with a combination therapy of Alimta and cisplatin. The primary endpoint was overall survival. Although the median overall survival was higher in patients receiving Alimta and cisplatin compared to patients receiving placebo and cisplatin (7.3 months versus 6.3 months), the improvement was not statistically significant.
Eli Lilly also said that there was no significant difference in the “quality of life” analysis of patients in the Alimta arm compared to the placebo arm.
Based on these disappointing results, Eli Lilly said that it will not seek approval for Alimta for the head and neck cancer indication in either the US or the EU. We note that another company, Amgen (AMGN), faced failure with the development of its oncology product, Vectibix, for the treatment of head and neck cancer.
Alimta is one of the most promising products in Eli Lilly’s portfolio and the company has been working on expanding the product label for additional indications. Alimta is currently approved for the first-line combination treatment of non-small cell lung cancer for patients with non-squamous histology; for the second-line treatment of non-small cell lung cancer; and for the combination treatment of malignant pleural mesothelioma.
Alimta sales came in at $1.71 billion in 2009 and approval for additional indications would help boost sales further. We note that generic player Teva (TEVA) is seeking approval for its version of the product.
Neutral on Eli Lilly
We currently have a Neutral recommendation on Eli Lilly, which is supported by a Zacks #3 Rank (short-term Hold rating). Strong sales from key products such as Cymbalta, Cialis and Alimta will be the fundamental strength to revenue growth in 2010.
Longer-term, we are unconvinced that ImClone will be the catalyst that Eli Lilly needs to grow revenue and earnings following Zyprexa’s US patent expiration in 2011. 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.
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