Yesterday, Eli Lilly and Company (LLY) received yet another approval from the U.S. FDA approval for its chemotherapy agent, Alimta. This time, Alimta received approval for use as maintenance therapy for advanced forms of non-small cell lung cancer (NSCLC), specifically in patients with a nonsquamous histology whose disease has not progressed after four cycles of platinum-based first-line chemotherapy. 

The maintenance therapy indication is the fourth approval for the product. Data supporting the use of Alimta as maintenance therapy were presented by the company at the 2009 Annual Meeting of the American Society of Clinical Oncology (ASCO). 

Maintenance therapy represents a new treatment field – traditionally, patients are re-treated with second-line therapy only when the disease progresses or recurs.However, with maintenance therapy, patients undergo initial therapy and receive additional treatment before the new tumor growth is detected.

The NSCLC market is one of the most crowded oncology markets. The company estimates that about 180k new cases of NSCLC are detected every year in the U.S.Despite the presence of competitors like Sanofi-Aventis’ (SNY) Taxotere and Roche’s Tarceva and Avastin, Alimta has succeeded in gaining decent market share. We estimate that Alimta holds roughly 20% market share in the second-line indication. 

Alimta is a strong contributor to the top-line with sales coming in at $1.15 billion in 2008.We expect Alimta to continue putting in a good performance thanks to the high rate of failure seen in first-line treatments such as Avastin and Tarceva. The new approval as maintenance treatment should help expand the market for Alimta. We expect Alimta sales to cross $2 billion in 2013. 

We maintain a Hold rating on Eli Lilly with a price target of $36. We remain concerned about the lack of a significant enough pipeline to offset key patent expirations at Lilly. Although EPS growth in the next couple of years should be driven by key products like Cymbalta, Cialis and Alimta, longer-term we are unconvinced that the ImClone acquisition will be the catalyst for growth once Zyprexa loses patent protection in 2011.

Read the full analyst report on “LLY”
Read the full analyst report on “SNY”
Zacks Investment Research