Eli Lilly & Co. (LLY:US)’s experimental drug ramucirumab failed to meet its goals for treating breast cancer in a late-stage trial, sending the shares down.
The therapy didn’t help patients live longer without their tumor progressing in the study known as Rose, Indianapolis-based Lilly said in a statement today. The compound did meet its primary goal in a separate late-stage trial called Rainbow for the treatment of people with advanced stomach cancer.
Lilly is counting on ramucirumab and experimental drugs for Alzheimer’s and diabetes to help revive growth (LLY:US) with revenue set to fall 20 percent in 2014 because of generic competition to the antidepressant Cymbalta and Evista for osteoporosis. Analysts expected about $1 billion in annual sales from ramucirumab by 2020, said Tim Anderson, a Sanford C. Bernstein analyst. Over the last two years, Lilly has had research setbacks on drugs for lymphoma, Alzheimer’s, schizophrenia and rheumatoid arthritis.
“This is yet another high-profile phase-3 failure for Eli Lilly that we believe could trigger investor calls for a shift in strategy,” said Alex Arfaei an analyst with BMO Capital Markets in a note to clients. “We remain cautious.”
Lilly fell 3 percent to $51.04 at the close in New York. The company has gained 3.5 percent this year.
Lilly is continuing to test the drug in four other types of malignancies though breast cancer would have been one of the biggest markets. There are an estimated 10 times as many cases of breast cancer as gastric cancer in the U.S. this year, the American Cancer Society has said.
The drug was a key product obtained by Lilly from its $6.5 billion acquisition of ImClone Systems Inc. in 2008.
Lilly said it didn’t intend to seek regulatory approval for the compound as an initial breast-cancer treatment based on the breast cancer study results.
“We are disappointed that this breast cancer trial did not meet its primary endpoint,” Richard Gaynor, Lilly’s vice president for oncology product development and medical affairs, said in the statement. “However, now with two positive gastric cancer trials, Lilly remains confident in the overall ramucirumab development program.”
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