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Eli Lilly dives as it scraps heart drug

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Eli Lilly has pulled the plug on a potential blockbuster medicine intended to ward off heart attacks and strokes, sending the company’s shares down as much as 10 per cent and dealing a blow to its strategy of pursuing high-risk “moon shot” drugs.

The company said it had accepted the advice of independent scientists who recommended it discontinue a large and expensive trial into Evacetrapib due to “insufficient efficacy”.

“There was a low probability the study would achieve its primary endpoint based on results to date,” the company said in a statement on Monday. It said the full results of the so-called Phase III study, which involved 12,000 patients in 37 countries, would be published in the future.

Analysts had expected Evacetrapib to be a blockbuster drug, contributing $800m of revenue in 2020, rising to $2.6bn in 2025. Shares in Lilly fell as much as 10 per cent in premarket trading in New York before recovering to trade 8 per cent lower.

The Indianapolis drugmaker had hoped Evacetrapib would prevent heart attacks and strokes by blocking the protein CETP, in theory boosting HDL, or “good” cholesterol and staving off serious cardiac events.

“The announcement from Eli Lilly management this morning that they have discontinued development of Evacetrapib is a major negative surprise,” said Jeffrey Holford, an analyst at Jefferies, who retained a “buy” rating on the company’s shares.

The company said it would take a pre-tax charge of up to $90m, or about 5 cents a share, in the fourth quarter, although Derica Rice, Lilly’s chief financial officer, said the failure did not change the company’s ability to generate long-term growth.

Mr Rice added: “Our recent string of positive data-readouts and our strong pipeline position us to increase revenue and expand margins through the remainder of this decade.”

The failure of Evacetrapib is a setback for Lilly’s pursuit of potential blockbuster drugs that are risky to develop but would generate huge sales if approved. The company is also pushing ahead with its Alzheimer’s drug, Solanezumab, which has failed in two clinical trials but has shown some promise in treating patients in the early stages of the disease.

Hopes that Solanezumab will be the first Alzheimer’s drug to be approved in a decade — a status that would guarantee blockbuster sales — have helped Lilly outperform most of its peers so far this year, as have data showing one of its diabetes drugs can reduce the incidence of heart attacks and strokes.

The company’s shares are up by 15 per cent since January, whereas the New York Stock Exchange’s pharmaceuticals index is flat, following a recent sell-off of the sector’s shares over fears of pricing pressure in the US.

Evacetrapib is the latest in a string of failed CETP inhibitors, following similar duds from Roche and Pfizer, which were abandoned due to safety issues that emerged during late-stage clinical trials.

Analysts said the news cast doubt on a rival CETP inhibitor being trialled by Merck and shares in the company were down 2 per cent in early New York trading.

Mark Schoenebaum, an analyst at Evercore ISI, said: “Today’s news is a negative for Lilly and we anticipate that investors will also likely read across negatively to Merck, whose CETP inhibitor, anacetrapib, is also being studied in an outcomes trial with data expected in early 2017.”

However, Lilly’s decision to drop Evacetrapib could boost sales of so-called PCSK9 inhibitors, a competing class of drugs that aims to prevent serious cardiovascular events.

Shares in Amgen, which recently launched its own PCSK9 inhibitor, Repatha, were up 2 per cent in New York trading, while shares in Sanofi, which makes rival drug Praluent, ticked up 0.1 per cent.

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