(Updates with closing share price in the fifth paragraph.)

Oct. 25 (Bloomberg) -- Eli Lilly & Co. said it will pull its Xigris sepsis drug from all markets after the treatment failed to reduce deaths in a study.

The withdrawal may cost Lilly $75 million to $95 million in the fourth quarter of 2011, or about 5 cents a share, the Indianapolis-based company said in a statement. Lilly’s 2011 adjusted earnings forecast remained at $4.30 to $4.35 a share.

Xigris generated $104 million in sales last year, or less than 1 percent of revenue. The treatment, approved in the U.S. in November 2001, is a genetically engineered form of a human protein that inhibits the formation of blood clots and proteins that trigger inflammation.

“While there were no new safety findings, the study failed to demonstrate that Xigris improved patient survival and thus calls into question the benefit-risk profile of Xigris and its continued use,” Timothy Garnett, Lilly’s chief medical officer said in the statement.

Lilly shares fell 2 percent to $37.42 at 4 p.m. New York time.

Aparna Krishnan, an analyst with IHS Global Insight in London, said a previous analysis by the U.S. Food and Drug Administration had identified safety concerns about the drug. That prompted the latest study, he said.

“Its benefit-risk profile shows that it’s not really important enough” to keep it on the market, Krishnan said.

--Editors: Reg Gale, Bruce Rule

To contact the reporter on this story: Drew Armstrong in Washington at darmstrong17@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net