Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Positive News for This Troubled Pharma Player

Eli Lilly (NYSE: LLY  )  recently rose nearly 3% following positive phase 3 results for cancer drug necitumumab. The company had previously halted a different necitumumab trial for safety issues. This positive bit of news was particularly welcome in the wake of Lilly's late-stage pipeline crashes. And with two blockbuster drugs set to expire in the next year, Eli Lilly needs all the signs of strength it can muster.

Here's what necitumumab's results mean for Lilly's overall health.

Positive results rise from the ashes
The necitumumab announcement was more of a nibble than a meal for investors since Lilly's holding back the full data for a meeting presentation next year.

But Lilly said that a combo therapy using necitumumab with two chemo drugs improved overall survival in patients with advanced squamous non-small-cell lung cancer, or NSCLC, better than chemo alone. NSCLC accounts for more than 80% of lung cancer cases and the squamous type for about 30% of those NSCLC cases. 

Potential side effects included rashes and a lesser but more serious risk of blood clots. That's still a much better safety profile than necitumumab turned up previously.

In 2011, Lilly and then-partner Bristol-Myers Squibb announced the cancellation of a late-stage necitumumab trial for nonsquamous non-small cell lung cancer. Safety concerns arose involving the possibility of blood clots. Bristol-Myers Squibb later dropped out of the partnership and returned full rights to Eli Lilly. 

The nonsquamous trial was allowed to continue, and the late-stage results put Lilly on track for a regulatory filing in 2014. 

Pipeline boost
All eyes are on Eli Lilly's pipeline right now thanks to the impending patent losses of $5 billion antidepressant Cymbalta this year and $1 billion osteoporosis drug Evista in 2014.   The diabetes projects have managed rather smooth forward momentum. But the recent past has featured late-stage cancellations of anticipated Alzheimer's iand rheumatoid arthritisdrugs.

Analysts predict up to $1 billion in annual sales for necitumumab, which would replace the lost Evista earnings on its own. But the drug could help plug the holes even if sales fall short. The simple fact remains that Lilly's losing two of its top 10 drugs soon. And it can use any help that comes along.

Total return growth 
How does Lilly compare to its competitors Merck (NYSE: MRK  ) and Sanofi (NYSE: SNY  ) ? All three companies are suffering from patent cliff losses. Merck's $4 billion asthma and allergy drug, Singulair, fell off patent last year while Sanofi lost best-selling blood thinner Plavix and high blood pressure drug Avapro. 

Here's a look at the total returns compared to the S&P 500:

LLY Total Return Price data by YCharts.

Lilly has not had a great run of staying above the S&P over the past five years. But Merck and Lilly are almost in a better position since the top drug's cliff is either over or about to be over. Sanofi's still facing the 2015 expiration of its $6.5 billion insulin Lantus. Eli Lilly and Merck have to work at rebuilding. Sanofi's rebuilding from some patent expirations while bracing for a potential crash.

Foolish final thoughts
Eli Lilly will take a beating after Cymbalta goes off the cliff and its revenues evaporate. But the pipeline is at least getting some things right in decent-sized markets such as diabetes and lung cancer.

One of the best parts of owning big pharma stocks is their attractive dividends, but smart investors know the importance of diversifying -- seeking high-yielding stocks from multiple industries. The Motley Fool's special free report "Secure Your Future With 9 Rock-Solid Dividend Stocks" outlines the Fool’s favorite dependable dividend-paying stocks across all sectors. Grab your free copy by clicking here.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2612160, ~/Articles/ArticleHandler.aspx, 9/27/2016 8:32:48 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 11 hours ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:01 PM
LLY $79.52 Down -1.64 -2.02%
Eli Lilly and Co. CAPS Rating: ***
MRK $62.15 Down -0.81 -1.29%
Merck and Co. CAPS Rating: ****
SNY $38.04 Down -0.31 -0.81%
Sanofi CAPS Rating: *****