* Clinical study showed no survival benefit
* Xigris was approved in U.S. in 2001
* Lilly to take Q4 charge of $75 mln-$95 mln
* Shares down 1.6 percent
By Lewis Krauskopf and Ransdell Pierson
Oct 25 (Reuters) - Eli Lilly and Co withdrew its sepsis drug Xigris from all markets after the product, deemed a potential big seller when it was approved a decade ago, failed to improve survival in a clinical trial.
Sepsis is a severe, often life-threatening illness caused by the immune system's over-aggressive response to infections -- releasing inflammatory proteins that cause shock and shut down multiple organs. The condition occurs in 1 to 2 percent of all hospitalizations in the United States.
Xigris, which has never reached its lofty initial sales projections, had global sales of about $100 million in 2010. It has garnered total sales of $1.5 billion since being approved in the United States in 2001 and in Europe the following year.
The intravenous drug increased the risk of serious bleeding in earlier studies, although no significant higher risk was found in the latest study.
"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 a statement on Tuesday.
Patients currently receiving Xigris treatment should stop, while doctors should not start any new patients on the drug, Lilly said.
The failed study, called PROWESS-SHOCK, comes only two days after Lilly's top-selling Zyprexa schizophrenia treatment lost U.S. patent protection in the United States -- making it prey to cheaper generics.
The PROWESS-SHOCK study began in March 2008 as a condition for continued market authorization in Europe of Xigris, whose chemical name is drotrecogin alfa.
Results of the 1,696-patient study showed Xigris did not meet the main goal of a statistically significant reduction in deaths from any cause over a 28-day period in patients with septic shock.
According to European Medicines Agency, 26.4 percent of patients taking Xigris died compared with 24.2 percent taking a placebo, a difference that was not deemed statistically significant.
The risk of severe bleeding events in the study, the main risk with Xigris, was similar, "suggesting there was no increased harm" from the Lilly drug, according to the European regulators.
Xigris has been used on top of standard treatments, most notably intravenous fluids and antibiotics.
In large studies conducted more than a decade ago, Xigris did significantly cut mortality, Lilly's Garnett said.
But in recent years, medical practice has greatly improved in intensive care units, Garnett said. Faster and more aggressive treatment with IV fluids and antibiotics has sharply improved survival rates of sepsis patients.
"So the incremental benefit of Xigris is no longer apparent, and no longer clinically relevant," Garnett said.
Lilly estimated it would take a charge tied to the withdrawal in the range of $75 million to $95 million in the fourth quarter, or about 5 cents per share after taxes. It maintained its full-year profit forecast that excludes special items.
Barclays Capital analyst Tony Butler said the Xigris withdrawal was not a major setback for Lilly because Wall Street already had low expectations for the drug.
Lilly shares were down 1.6 percent at $37.57 on Tuesday afternoon on the New York Stock Exchange.