Eli Lilly and Co said it will not seek a breast cancer approval for one of its most closely watched experimental drugs after it failed to significantly delay disease progression and showed no survival benefit in a late-stage trial.
The drug, ramucirumab, has been successful in gastric cancer trials and is also being tested for colon, liver and lung cancers, with key late stage data on those three expected next year. But Lilly shares fell more than 3 percent after it released the disappointing breast cancer results.
"While Street expectations were low for ramucirumab in breast, they were not quite this low," ISI Group analyst Mark Schoenebaum wrote in a note, saying the drug was expected to delay worsening of breast cancer but not extend survival.
"We believe there is approximately $500-$600 million currently in Street models for breast cancer. This will now need to come out of models," Schoenebaum said.
The company needs new medicines to offset steep revenue declines from drugs facing generic competition. It's top seller, the antidepressant Cymbalta, which had $1.5 billion in sales in the second quarter, loses U.S. patent protection later this year.
The company is counting on ramucirumab - which it gained with its $6.5 billion acquisition of ImClone Systems Inc in 2008 - and some promising diabetes treatments to help spur future growth.
The trial of patients with advanced breast cancer compared ramucirumab plus the chemotherapy drug docetaxel with docetaxel alone. A delay in disease progression seen with the Lilly drug was not statistically significant and no survival benefit was demonstrated, the company said.
A separate Phase III trial, testing ramucirumab in advanced gastric cancer, met its main goal by extending patients' overall survival. It was the second stomach cancer trial that showed the drug improved survival. The company said it will provide detailed data from that study some time next year.
Lilly said it expects to complete its submission seeking U.S. approval for gastric cancer by the end of this year. Given the unmet need in that cancer, it could qualify for an expedited priority review, potentially cutting its U.S. approval timeline.
Sanford Bernstein analyst Timothy Anderson forecast annual sales reaching $600 million in 2020 for gastric cancer alone.
Damien Conover, an analyst with Morningstar, said the odds of ramucirumab succeeding in colon, liver and lung cancers were higher than for breast. "But even without those, this could be a blockbuster drug," he said, based on its potential in gastric cancer.
The company also appears to be more confident in the drug's other potential uses.
"Given how the landscape has developed, the one that there were some concerns about was breast and there was a lot of optimism about the others," Richard Gaynor, Lilly's vice president for oncology product development and medical affairs, said in a telephone interview.
Ramucirumab works in much the same way as Roche's top-selling biotech cancer medicine Avastin, by blocking development of blood vessels that feed tumors, a process known as angiogenesis.
The breast cancer trial was begun long before Avastin failed to show a survival benefit and had its conditional breast cancer approval revoked by the Food and Drug Administration, Gaynor explained.
"It really depends on the antiangiogenic context, where you're going, what tumors, and gastric cancer is one where we've made major inroads and breast cancer, unfortunately, the whole field has not," Gaynor said.
He said colon, lung and liver cancers have the angiogenic properties that could lead to success for ramucirumab.
Avastin has about $6 billion in annual sales for colon and lung cancer and still garners some sales from off-label use in breast cancer, which would have been threatened had ramucirumab succeeded there.
"This news lifts a small overhang on Roche," Anderson said.
Eli Lilly shares were down $1.83, or 3.5 percent, at $50.78 in afternoon trading on the New York Stock Exchange.
(Editing by Sriraj Kalluvila and Carol Bishopric)