Lilly Study Stopped on Safety Concerns - Analyst Blog

Eli Lilly (LLY) recently suspended a phase III study that was being conducted with its oncology candidate, tasisulam. The study has been put on “full clinical hold” due to safety concerns.

Tasisulam was being evaluated for the second-line treatment of patients suffering from unresectable or metastatic melanoma. Melanoma is the deadliest form of skin cancer and is estimated to affect more than 68,000 people in the US annually. Eli Lilly was granted orphan drug status for stage IIb-IV melanoma in the US.

The phase III study, involving more than 300 patients, was being conducted to evaluate the efficacy, safety, and tolerability of tasisulam compared to paclitaxel.

Under the full clinical hold, patients will no longer receive additional doses of the candidate and the existing data will be analyzed to determine the modifications that may be needed for the study.

While the melanoma study will be on clinical hold, Eli Lilly said that it is continuing to evaluate the candidate for the treatment of a wide range of tumors like soft tissue sarcoma, breast, ovarian and renal cancers, as well as non-small cell lung cancer and acute leukemia.

The company said that it is continuing with its studies for these indications as the dosing is different for these studies. However, Eli Lilly will closely monitor patient safety in these studies.

The suspension of the phase III study is the latest pipeline setback for Eli Lilly. Earlier in October, Eli Lilly had announced that Alimta failed to achieve its primary endpoint in a phase III study that was being conducted in patients suffering from recurrent or metastatic squamous cell cancer of the head and neck (SCCHN).

Then in August 2010, Eli Lilly announced that it was halting the development of semagacestat (LY450139), which was in late-stage studies for the treatment of patients suffering from Alzheimer's disease.

Neutral on Eli Lilly

We currently have a Neutral recommendation on Eli Lilly, which is supported by a Zacks #3 Rank (short-term Hold rating). Strong sales from key products such as Cymbalta, Cialis and Alimta will be the fundamental strength to revenue growth in 2010.

Longer-term, we are unconvinced that ImClone will be the catalyst that Eli Lilly needs to grow revenue and earnings following Zyprexa's US patent expiration in 2011. We expect the top-and bottom-line to remain under pressure from late 2011 as the contraction in Zyprexa sales more than offsets growth in Cymbalta, diabetes and new product sales.

Barring significant cost-cutting efforts or additional revenue catalysts, 2013 will be the beginning of a very challenging period, with Cymbalta losing US patent protection during the year.