(Reuters) - Eli Lilly and Co has stopped a late-stage trial of its closely watched cholesterol treatment after it proved ineffective, sending its stock down more than 9 percent and casting greater skepticism over the potentially lucrative class of medicines.
The setback, announced by the company on Monday, also hit shares of Merck & Co Inc, which is now the only major drugmaker still moving aggressively ahead with a member of the novel family of drugs called CETP inhibitors.
“Today’s news is a negative for Lilly and we anticipate that investors will also likely read across negatively for Merck,” Evercore ISI analyst Mark Schoenebaum said in a research note. Merck stock fell as much as 2.5 percent.
Lilly’s drug evacetrapib, like rival CETP inhibitors, is meant to sharply raise “good” HDL cholesterol while cutting levels of “bad” LDL cholesterol. Current cholesterol fighters called statins, such as Pfizer Inc’s Lipitor, prevent artery-clogging by slashing LDL levels, but have little impact on heart-protective HDL.
Lilly said it stopped the evacetrapib study on the recommendation of an independent data-monitoring committee, which cited insufficient efficacy of the drug. The study was not stopped due to safety concerns, Lilly added.
Jefferies analyst Jeffrey Holford had been counting on evacetrapib to be approved in 2017 and generate eventual annual sales of $5 billion for Lilly. He now expects no sales from the drug, even though Lilly will continue to test it in smaller ongoing studies.
Pfizer’s CETP inhibitor, torcetrapib, was scrapped in 2006 after being linked to deaths in a large $800 million study, dashing the company’s hopes it would be approved and generate annual sales of over $10 billion. A second CETP inhibitor, Roche Holding AG’s dalcetrapib, was ditched in 2012 due to lack of benefit.
Merck is conducting a late-stage trial of its candidate, anacetrapib, that is expected to conclude in 2017.
In mid-stage studies, the Merck drug raised HDL levels by a whopping 138 percent, while cutting LDL by 40 percent. But the big question is whether it will safely reduce deaths, heart attacks and strokes - goals that have eluded its rivals.
Analysts said Merck’s drug is the only major remaining CETP inhibitor and remains a potential strong competitor to two recently approved cholesterol drugs called PCSK9 inhibitors that can slash LDL levels 60 percent beyond reductions seen with statins alone.
The PCSK9 inhibitors are Praluent from Regeneron Inc and Sanofi, and Repatha from Amgen Inc, both deemed potential blockbusters.
Indianapolis-based Lilly is conducting no other late-stage trials of cardiovascular drugs, one of its seven key areas.
Lilly said it will take a charge of up to $90 million, or 5 cents per share, in its fourth quarter due to the setback.
Lilly shares were down 8 percent to $79.22 on the New York Stock Exchange. Merck shares were down 0.6 percent to $50.64 at midday.
Reporting by Ransdell Pierson in New York and Vidya L Nathan in Bengaluru; Editing by Jeffrey Benkoe and James Dalgleish