Eli Lilly & Co. is still reeling from the loss of patent exclusivity for the antipsychotic Zyprexa (olanzapine), but the Indianapolis-based pharma is confident that its late-stage pipeline will push profits back to growth by 2014. Yet, two of its collaborators are not as sure, and have chosen to end or downscale their relationships surrounding certain assets.

During its fourth-quarter call on Jan. 29, Lilly revealed to investors that its collaboration with Bristol-Myers Squibb Co. regarding Phase III oncology asset necitumumab has been terminated in North America and Japan. Bristol pulled out of the three-year partnership for the squamous non-small cell lung cancer treatment, leaving Lilly with sole worldwide development and commercialization rights. A Phase III non-small cell lung cancer trial was dropped two years ago due to safety concerns.

Lilly assured investors during the call that it intends to continue the development of necitumumab and that data from the late-stage SQUIRE trial is expected in late-2013/early-2014. The company plans to make the therapy part of a comprehensive treatment continuum for lung cancer that also includes Alimta (pemetrexed) and clinical drug ramucirumab. “If the lung cancer trials for necitumumab and ramucirumab are positive, we would be positioned to offer a comprehensive treatment strategy for non-small cell lung cancer patients, with Alimta, the standard of care for first-line non-squamous non-small cell lung cancer; with necitumumab for first-line squamous non-small cell lung cancer; and with ramucirumab for second-line treatment,” said Susan Mahoney, president of Lilly Oncology.

Alimta contributed $2.5 billion to Lilly’s 2012 revenues of $22.6 billion, slightly above analyst expectations. Sales of the cancer drug were second to Lilly’s depression treatment Cymbalta (duloxetine), which brought in sales of $5 billion. The drug will lose patent protection in December, contributing further to Lilly’s revenue gap. Sales for the full-year 2012 are down 7% from the year-prior due to the generic competition for Zyprexa, which has lost more than 90% of its $5 billion in annual revenues since going off patent in 2011.

Late-stage oncology assets will be a key driver for Lilly going forward. Data for ramucirumab, a fully-human monoclonal antibody that targets the VEGF-2 receptor, showed that it improved overall survival, as well as progression-free survival in patients with metastatic gastric cancer. The company intends to submit the drug for approval in the U.S. and EU in 2013. Two other Phase III trials for ramucirumab are expected to report out this year. A study of the drug in breast cancer patients is also expected in 2013 Also see "Ramucirumab Becomes First Lilly ImClone Compound To Enjoy Phase III Success" - Pink Sheet, 15 October, 2012..

Doubling Down On Diabetes

The other major contributor to Lilly’s late-stage pipeline strategy is its diabetes franchise. The company’s SGLT-2 inhibitor empagliflozin, under development with Boehringer Ingelheim GMBH, met all primary endpoints in late-stage studies. The companies’ collaboration also previously included a basal insulin analog, LY2605541, but Boehringer has bowed out of development of that drug. Lilly will now assume sole development and commercialization Also see "Lilly/BI Report Success For Oral Diabetes Drug, Adjust Alliance" - Pink Sheet, 7 January, 2013..

Further data regarding empagliflozin is expected this year and a filing with FDA is likely for 2013. Lilly also has filings planned for its insulin glargine, a generic version of Sanofi’s Lantus, as well as its once-weekly GLP-1 analog dulaglutide Also see "New Long-Acting Insulin Offerings Could Derail Lantus Franchise" - Pink Sheet, 18 June, 2012..

Regarding the potential commercial opportunity for a generic insulin, Lilly’s VP of Investor Relations Philip Johnson said, “We do think we're probably one of a very small number of companies that's well positioned to compete effectively in this space, given the current insulin manufacturing infrastructure that we have, the commercial infrastructure that we'll continue to have, as well as the device presence. It's hard to predict going forward, but in large numbers, we've said that we could certainly see significant continued use of the glargine molecule through this decade, roughly maybe a third of it still being branded Lantus, probably another third roughly being the other forms or other companies' insulin glargine products of which we know.”

Since reporting third quarter earnings, Lilly has begun Phase I clinical trials of three new diabetes assets and one cancer asset. It now has 13 assets in Phase III.

Lilly Puts Faith In Late-Stage Assets In Hopes Of Profit Growth In 2014

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