Eli Lilly (LLY 0.54%) 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 (MRK 0.25%) and Sanofi (SNY 0.68%)? 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.
