Lilly to Halt Development of Experimental Cholesterol Drug -- 2nd Update

By Peter Loftus and Tess Stynes 

Eli Lilly & Co. said it is ending development of its experimental cholesterol-modifying drug for cardiovascular disease because the treatment wasn't effective enough in a clinical trial--the latest setback for a type of drug that was seen as a high-risk investment.

Some analysts had predicted the drug, evacetrapib, could become a blockbuster if it reached the market. The Indianapolis drug maker's shares fell 8.1% to $79.13 in early trading Monday.

The setback makes it more challenging for Lilly to recover from a series of patent expirations for older blockbuster drugs that have hurt the company's sales and profits in recent years. Lilly has had some success bringing newer drugs to market and continues to develop other experimental drugs with solid sales potential, but the absence of evacetrapib dims the company's growth outlook.

It's also the latest setback for a class of drugs known as inhibitors of cholesteryl ester transfer protein, or CETP. The pills were designed to raise levels of good cholesterol and to lower levels of bad cholesterol, with the aim of reducing the risk of heart attacks and strokes beyond what could be accomplished by a widely used class of older drugs known as statins.

But so far, the CETP inhibitors haven't panned out in clinical trials. In 2006, Pfizer Inc. halted a large study of its entry in the class, torcetrapib, because the drug increased risk of heart problems. Pfizer later scrapped the project. In 2012, Roche Holding AG terminated development of its CETP inhibitor because of insufficient efficacy in studies.

Lilly and Merck & Co. continued to develop their CETP inhibitors, in hopes their drugs would sidestep the safety and efficacy problems with Pfizer's and Roche's drugs.

Lilly's study, which began in 2012, had enrolled more than 12,000 patients with high-risk cardiovascular disease, at test sites in 37 countries. Some were given the Lilly drug daily while others were given a placebo for up to four years. All patients also received older treatments for cardiovascular disease. The trial was due to end in July 2016.

The study tracked whether evacetrapib reduced the risk of cardiovascular death, heart attack, stroke, coronary surgery or hospitalization for unstable angina among patients, versus a placebo.

Lilly said Monday an independent committee monitoring the study recommended that it be halted based on data indicating a low probability that the therapy would meet its primary goals in the study.

Evercore analyst Mark Schoenebaum said in a note on Monday, "Bottom line: today's news is a negative for [Lilly]."

Without evacetrapib, Evercore estimates a negative impact of about $5 a share on Lilly's valuation, reducing the firm's estimate on the stock to about $80 a share from $85, and a negative impact on its view for 2020 per-share earnings of 50 cents a share, bringing its 2020 guidance to $6.28 a share.

"We're obviously disappointed in this outcome, as we hoped that evacetrapib would offer an advance in treatment for people with high-risk cardiovascular disease," said David Ricks, Lilly senior vice president and president of Lilly Bio-Medicines. "We remain confident in our pipeline as we prepare for launches in other therapeutic areas with significant unmet needs."

The drug maker expects to record a fourth-quarter pretax charge of as much as $90 million. The company plans to incorporate the charge into its updated 2015 outlook when it releases its third-quarter results on Oct. 22.

In February, Lilly said it would extend a phase III trial of evacetrapib by six months to provide a better view of whether the treatment in combination with statins is more effective than statins alone in treating such cases.

A Merck spokeswoman said a 30,000-patient trial of its CETP inhibitor, anacetrapib, continues, and that results are expected in 2017. "We need to see the data to better understand Lilly's decision to discontinue its CETP program," she said. "Merck continues to believe that anacetrapib has the potential to be an important treatment in the management of atherosclerosis."

Merck shares declined 1.1% to $50.37 in recent trading.

Write to Peter Loftus at [e-mail] and Tess Stynes at [e-mail]

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(END) Dow Jones Newswires

October 12, 2015 12:38 ET (16:38 GMT)

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