Eli Lilly (NYSE:LLY) announced yesterday that a trial testing its osteoporosis drug, arzoxifene, met its primary endpoint. There's no need to break out the crystal for a celebratory toast of milk, though: Eli Lilly has decided to end its development of the drug.

Unfortunately, a drug has to do more than decrease the risk of vertebral fractures and invasive breast cancer to make a meaningful impact in the crowded osteoporosis market, which includes GlaxoSmithKline's (NYSE:GSK) and Roche's Boniva, Merck's (NYSE:MRK) Fosamax, and Procter & Gamble's (NYSE:PG) and sanofi-aventis' (NYSE:SNY) Actonel, to name just a few. It also would have had to compete with up-and-coming drugs such as Amgen's (NASDAQ:AMGN) Prolia.

Arzoxifene needed to be nearly flawless, but that was far from the case. In addition to failing to meet secondary endpoints, including the reduction of non-spinal fractures, arzoxifene's side-effect profile wasn't ideal. Patients taking the drug had increased incidences of venous thromboembolic events, hot flashes, and gynecological-related events.

Them's the breaks.

Cutting its losses is probably the best move for Eli Lilly. The company already has a blockbuster in its osteoporosis drug Evista, so there's no reason to bring an inferior drug to market.

But even though might have made the best move, Eli Lilly can't afford too many more late-stage failures. Patent expirations for many of Lilly's blockbusters are quickly approaching, and, while the company has more than 60 molecules in clinical development, most are early in testing. With the exit of arzoxifene, Eli Lilly has just six drugs in phase 3 development.

Investors are going to have a bone to pick with Eli Lilly if most of those drugs don't pan out.

The dividend might be the only thing that saves Lilly from falling too far. Find out the five signs of a strong dividend stock in this article by Todd Wenning.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Procter & Gamble is an Income Investor recommendation. The Fool owns shares, too, and has a disclosure policy.