Eli Lilly (LLY) Slides After Its Experimental Breast Cancer Drug Fails

Shares of pharma giant Eli Lilly (LLY) tumbled last week, after the company reported that it would not seek breast cancer approval for ramucirumab, its experimental cancer treatment which has also been tested on gastric, colon, liver, and lung cancers. Wall Street had expected Lilly's treatment to compete with Roche's top selling cancer treatments Herceptin and Avastin, to tap into an estimated market of $500 million to $600 million in annual sales.

Lilly intended for ramucirumab to work in the same way as Avastin, by blocking the growth of new blood vessels that cancer cells need to survive and grow. Daily Chart
It was a big setback for ramucirumab, but it doesn't eliminate it from the oncology race, and it has shown favorable results in treating gastric cancer. Treating gastric cancer alone could generate annual sales of $600 million by 2020, according to Sanford Bernstein analyst Timothy Anderson. However, Leerink Swann analyst Seamus Fernandez reduced his peak sales estimate for ramucirumab by $300 million to $1.3 billion. ISI analyst Mark Schoenebaum concurred with that bearish view, stating that the setback would cost the company $500 million to $600 million in annual sales and shave 3% to 8% off its full-year earnings per share. Lilly expects to submit an application for FDA approval to use ramucirumab as a gastric cancer treatment to prolong the length of survival for patients, by the end of the year. It is expected to get a fast track approval, due to the current market need for gastric cancer patients. Test results for its ongoing trials for colon, liver, and lung cancers are expected sometime next year. Lilly's failure takes some pressure off of Roche, which relied on Avastin for $6 billion in annual sales last year. Roche also has a top-selling breast cancer drug, Herceptin, which was recently approved in the EU as a subcutaneous treatment that could completely replace its current intravenous form. For Lilly, the major challenge going forward is filling the void left by its former blockbuster antidepressant, Cymbalta, which lost patent protection last year. Lilly expects to take a 20% hit on sales this year as a result. This wasn't the first major disappointment for Lilly this year -- is Alzheimer's treatment, solanezumab, showed poor efficacy rates in phase 3 for advanced Alzheimer's cases. Rather than give up, Lilly is now testing the treatment on mild Alzheimer's cases instead. Other News About LLY Lilly Drug Fails in Breast Cancer Trial, Shares Fall Lilly suffers another huge setback. Another Major Pipeline Setback for Eli Lilly Will Eli Lilly ever win? Other Stocks in the News Philip Morris to Buy Stake in Algerian Tobacco Company Big tobacco goes to Africa. Apple Inc Issues Patch for iOS7 Bug Apple tries to fix some problems with iOS 7. Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on Oct 1, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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