Lilly: A New Administration
New CEO David Ricks took over Lilly as the company continues to climb out of its post-Cymbalta/Zyprexa rut.
Eli Lilly & Co.
Lilly Corporate Center
Indianapolis, IN 46285
|Product||2016 Sales||2015 Sales|
All sales are in millions of dollars.
In millions of dollars, except EPS
New Year’s Day 2017 brought new leadership for Eli Lilly and Co. David A. Ricks, the company’s former president of Bio-Medicines, took over as CEO in place of the retiring John C. Lechleiter, Ph.D., and he wasted no time in rearranging the company’s management structure, announcing a series of changes just four days later. Ricks is a 21-year veteran of Lilly, having joined the company as a business development associate in 1996.
The company that Ricks inherited seems well along in the process of digging itself out of the rut it landed in after the loss of exclusivity for Cymbalta and Zyprexa. Top-line revenue in Dr. Lechleiter’s final year passed $20 billion for the first time since 2013, the last year of Cymbalta’s exclusivity. And two of the sales portfolio’s newer entrants, Trulicity and Cyramza, are both showing signs of future success, with Trulicity looking to pass the $1 billion sales mark easily this year. While the November 2017 Cialis patent expiration will likely put a dent in Lilly’s top line, Ricks has cause to feel confident that the hard days are past.
“Newly launched products – including Trulicity, Cyramza, Jardiance, and Taltz – led Lilly’s volume-driven growth in 2016,” Ricks says. “Pipeline progress also continued with approvals of new products and new indications for existing products in our core therapeutic areas of diabetes, oncology and immunology. We expect this momentum to continue in 2017 and remain focused on launching new products, improving productivity, and advancing our pipeline as we work to bring life-changing medicines to patients.”
Lilly’s sales in 2016 totaled $21.22 billion, an improvement of 6.3 percent compared with the previous year. Net income was up by 13.7 percent to $2.74 billion, and earnings per share rose by 32 cents to $2.58. In the first half of 2017, the top line rose another 7.6 percent to $11.05 billion. Net income was down 24.5 percent to $897 million and EPS dropped by 27 cents to $0.85, but some of this was due to acquired in-process R&D charges and other one-time items; without these included, Lilly executives estimate that EPS would have been up by 24 percent. Full-year 2017 EPS is being projected at between $2.51 and $2.61.
Once again at the top of Lilly’s sales chart, the diabetes product Humalog generated $2.77 billion in sales for the company in 2016, a decline of 2.6 percent. According to company executives, this was primarily due to lower realized prices in the United States. In the first half of 2017, sales of Humalog were up 6 percent to $1.39 billion. In June, FDA approved the Humalog Junior KwikPen for the treatment of diabetes. Humalog Junior KwikPen is a prefilled pen with half-unit dosing capability, enabling finer dose adjustment for those who need it.
The erectile dysfunction product Cialis generated one final bounce in sales in 2016, rising 7 percent to $2.47 billion. With patent expiration approaching in November, Cialis sales for the first half of 2017 fell 3.8 percent to $1.16 billion.
The diabetes product Trulicity, first approved by FDA in September 2014, nearly leaped to blockbuster status in 2016, with sales rising from $249 million to $926 million. According to company leaders, this was due to growth in the GLP-1 market and increased market share. In the first half of 2017, sales of Trulicity more than doubled again, from $345 million to $853 million.
In February, FDA updated the Trulicity label to include use in combination with basal insulin for adults with type 2 diabetes. The label update was based on FDA review of results from the AWARD-9 clinical trial, a Phase IIIb, randomized, double-blind, placebo-controlled, 28-week study that evaluated the efficacy and safety of once-weekly Trulicity 1.5 milligrams as an add-on to titrated insulin glargine, with or without metformin, compared to placebo as an add-on to titrated insulin glargine, with or without metformin. Study results showed that Trulicity 1.5 milligrams significantly reduced A1C as an add-on to insulin glargine (1.4 percent) after 28 weeks compared to placebo plus insulin glargine (0.7 percent). The label was also updated to include results from the AWARD-8 clinical trial, a Phase IIIb randomized, double-blind, placebo-controlled, 24-week study that evaluated the efficacy and safety of Trulicity 1.5 milligrams as an add-on to sulfonylurea compared to placebo plus sulfonylurea. With this update, Trulicity became the first GLP-1 receptor agonist with a label that allows its use in combination with mealtime insulin or basal insulin.
Another Lilly product that enjoyed a solid sales jump in 2016 was the oncology product Cyramza, with the numbers rising from $384 million to $614 million. So far Cyramza has earned approvals from FDA in three areas – gastric cancer, NSCLC, and metastatic colorectal cancer. In the first half of 2017, sales of Cyramza rose another 28.6 percent to $358 million.
In May, Lilly announced that the company’s Phase III RANGE study of Cyramza met its primary endpoint of progression-free survival, demonstrating a statistically significant improvement. The Phase III global, randomized, double-blinded, placebo-controlled trial is evaluating Cyramza in combination with docetaxel in patients with locally advanced or unresectable or metastatic urothelial carcinoma whose disease progressed on or after platinum-based chemotherapy. Bladder cancer accounts for the majority of all urothelial carcinoma.
With these results, RANGE is the first Phase III study of any therapy to show superior PFS over chemotherapy in a post-platinum setting in urothelial cancer. Also, Cyramza is the first antiangiogenic agent to extend PFS in a Phase III trial in urothelial cancer. Patients previously treated with a checkpoint inhibitor were allowed to enroll in the RANGE study. Although the primary endpoint has been met, Lilly anticipates that overall survival results are likely to be required for global regulatory submissions. Final OS results are currently expected in mid-2018.
Taltz, first approved by FDA in March 2016 for the treatment of plaque psoriasis, generated $113 million in sales through the end of that year and brought in another $235 million in the first half of 2017. And label expansion may be on the way. In June, Lilly announced that the majority of patients with active psoriatic arthritis treated with Taltz exhibited either no progression or minimal progression of radiographic structural joint damage through 52 weeks of treatment in the SPIRIT-P1 trial. Lilly has filed a supplemental biologics license application with FDA for Taltz as a treatment for adult patients with active PsA.
During the 24-week, double-blind period of the SPIRIT-P1 study, patients with active PsA who had never received a biologic disease-modifying antirheumatic drug were treated with either 80 milligrams of Taltz once every two weeks or every four weeks (following a 160-milligram starting dose), or Humira at the approved dose of 40 milligrams every two weeks or placebo. Humira was employed as an active control in the SPIRIT-P1 study and was not powered for comparison with Taltz treatment groups. Following completion of the 24-week treatment period, patients were re-randomized to receive 80 milligrams of Taltz every two weeks or four weeks to evaluate response rates during the extension period through 52 weeks.
Patients treated with Taltz at both dosing regimens experienced either no progression or minimal radiographic progression of structural joint damage as measured by the change from baseline in the van der Heijde modified Total Sharp Score (mTSS) for PsA at 52 weeks. No progression or minimal radiographic progression of structural joint damage was also observed for patients who switched from placebo or Humira to either dosing regimen of Taltz after the 24-week treatment period.
Just a few days after David Ricks took over as president and CEO of Lilly on Jan. 1, the company announced a series of management changes. Christi Shaw, who had worked at Lilly from 1989 to 2002 and most recently served as president of Novartis USA, was hired to lead the company’s Bio-Medicines business beginning April 3. Shaw succeeded Ricks in his previous role as senior VP and president of Lilly Bio-Medicines.
Also, beginning on Feb. 1, Lilly’s Diabetes, Oncology and Bio-Medicines human pharmaceutical therapeutic business areas assumed commercial responsibility for their products in China, in addition to the U.S., Japanese, and Canadian markets in which they already operate. Lilly Diabetes will host the company’s human pharmaceutical commercial operations in the United States, China, Japan, and Canada. Enrique Conterno, senior VP of Lilly and president of Lilly Diabetes, assumed additional responsibilities as president of Lilly USA.
Additionally, Lilly’s Emerging Markets business was combined with Europe to form Lilly International, which now has commercial responsibility for the company’s human pharmaceutical products in these markets. Alfonso (Chito) Zulueta, who led the Emerging Markets business for the last three years, is now senior VP of Lilly and president of Lilly International.
“Lilly begins 2017 with a clear view of its opportunities for growth in the years ahead,” Ricks said in the announcement. “The adjustments we are announcing today to pharmaceutical therapeutic and geographic business areas are designed to maximize the potential of our late-stage pipeline and newly launched medicines, while improving productivity.”
In September, Lilly announced actions to streamline operations to more efficiently focus resources on developing new medicines and to improve its cost structure. Global workforce reductions, including those from a U.S. voluntary early retirement program, are expected to impact approximately 3,500 positions.
With the streamlining efforts announced, company leaders expect annualized savings of about $500 million that will begin to be realized in 2018. These initiatives are part of a broad productivity plan underway at the company to improve its cost structure, particularly fixed costs.
“We have an abundance of opportunities – eight medicines launched in the past four years and the potential for two more by the end of next year,” Ricks says. “To fully realize these opportunities and invest in the next generation of new medicines, we are taking action to streamline our organization and reduce our fixed costs around the world.”
Lilly executives expect the majority of the positions eliminated to come from a U.S. voluntary early retirement program, which is being offered to employees who meet certain criteria. Those who participate will receive enhanced retirement benefits. The program, announced to U.S. employees on Sept. 7, will be largely completed by the end of the year.
Remaining positions will come from other anticipated workforce reductions, including select site closures. The company will move production from its animal health manufacturing facility in Larchwood, Iowa, to an existing plant in Fort Dodge, Iowa, and continue productivity improvement efforts around the world. In addition, a research and development office in Bridgewater, N.J., and the Lilly China Research and Development Center in Shanghai, China, will close as the company streamlines its pharmaceutical research and development activities. The company will also further consolidate some work to its existing shared service centers.
In addition to the U.S. voluntary early retirement program, the company will determine where it needs to further reduce costs and improve efficiencies. These efforts will include evaluation of necessary adjustments to the workforce, with the goal of continued investment in new medicines and growth. All streamlining efforts will be consistent with applicable local requirements.
Lilly expects to incur charges of about $1.2 billion pre-tax, which includes the estimated participation of the U.S. voluntary early retirement program, global severance, and facility closures. These charges will be reflected as asset impairment, restructuring, and other special charges in the third and fourth quarters of 2017. The company’s reported earnings per share guidance in 2017 will be reduced by the amount of the charges. The annualized workforce savings of about $500 million will be about equally split to improve the company’s cost structure and reinvest in the business, including product launches and clinical development for new indications and line extensions.
Acquisitions & Collaborations
In January, Lilly and CoLucid Pharmaceuticals Inc. announced an agreement for Lilly to acquire CoLucid for $46.50 per share or about $960 million. This all-cash transaction, company leaders say, will enhance Lilly’s existing portfolio in pain management for migraine, while adding a potential near-term launch to its late-stage pipeline. The biopharma company CoLucid Pharmaceuticals was developing the oral 5-HT1F agonist lasmiditan for the acute treatment of migraine. CoLucid completed the first of two pivotal Phase III trials. The deal duly closed in March.
Also during January, Lilly announced the expansion of an existing immuno-oncology collaboration with Merck, to add a new study of Lilly’s Lartruvo with Keytruda in patients with previously treated advanced or metastatic soft tissue sarcoma. In October 2016 FDA granted accelerated approval for Lartruvo in combination with doxorubicin, for the treatment of adults with STS with a histologic subtype for which an anthracycline-containing regimen is appropriate and which is not amenable to curative treatment with radiotherapy or surgery. Lartruvo, in combination with doxorubicin, also received conditional marketing authorization from the European Medicines Agency in November 2016 for the treatment of adults with advanced STS not amenable to curative treatment with surgery or radiotherapy and who have not been previously treated with doxorubicin.
In June, Lilly and KeyBioscience AG agreed to a new collaboration focused on the development of dual amylin calcitonin receptor agonists (DACRAs), a potential new class of treatments for metabolic disorders such as type 2 diabetes. The dual activation of calcitonin and amylin receptors is thought to improve insulin sensitivity, suppress food intake, reduce fat deposition, improve blood glucose levels, and cause weight reduction. The collaboration includes access to the DACRA platform with multiple molecules including KBP-042, KBP-089, and KBP-056. KeyBioscience has initiated Phase II development with KBP-042. Other assets included in the collaboration, engineered for differences in effect or potency, range from Phase I to pre-clinical.
Under terms of the agreement, Lilly will receive worldwide rights to develop and commercialize these molecules. In exchange for these rights, KeyBioscience received an initial payment of $55 million and is eligible for additional potential development, regulatory, and commercialization milestones, as well as tiered royalty payments on future sales.
In July, Lilly and Nektar Therapeutics announced a strategic collaboration to co-develop NKTR-358, a novel immunological therapy discovered by Nektar. NKTR-358, which achieved first human dose in Phase 1 clinical development in March, has the potential to treat a number of autoimmune and other chronic inflammatory conditions. The compound is a potential first-in-class resolution therapeutic that may address an underlying immune system imbalance in patients with many autoimmune conditions. It targets the interleukin (IL-2) receptor complex in the body in order to stimulate proliferation of powerful inhibitory immune cells known as regulatory T cells. By activating these cells, NKTR-358 may act to bring the immune system back into balance. This, company leaders say, could lead to a profound clinical impact and healthy organ function in autoimmune conditions.
Under the terms of the agreement, Nektar received an initial payment of $150 million and is eligible for up to $250 million in additional development and regulatory milestones. Lilly and Nektar will co-develop NKTR-358 with Nektar responsible for completing Phase I clinical development. The parties will share Phase II development costs 75 percent Lilly and 25 percent Nektar. Nektar has the option to participate in Phase III development on an indication-by-indication basis. Nektar has the opportunity to receive double-digit royalties that increase commensurate with its Phase III investment and product sales. Lilly is responsible for all costs of global commercialization. Nektar has an option to co-promote in the United States under certain conditions.
Also in July, Lilly and Purdue University announced a strategic collaboration to conduct life science research. The five-year agreement, through which Lilly will provide up to $52 million, marks Purdue’s largest strategic collaboration with a single company. The initial research focus areas include developing improved delivery of injectable medicines with the goals of reducing pain, decreasing the number of injections, and enabling better patient compliance and overall health; and developing predictive models for clinical success that reduce risks associated with investing in drug development and more effectively predict the outcome of new therapies in humans.
In The Pipeline
In April, Lilly announced that following a pre-planned interim analysis for MONARCH 3, the trial met its primary endpoint of demonstrating statistically significant improvement in progression-free survival. In addition, improvement was shown in a key secondary endpoint of objective response rate.
The Phase III study evaluated abemaciclib, a cyclin-dependent kinase (CDK)4 and CDK6 inhibitor, in combination with an aromatase inhibitor (letrozole or anastrozole) compared to treatment with an aromatase inhibitor alone in women with hormone-receptor-positive (HR+), human epidermal growth factor receptor 2-negative (HER2-) advanced breast cancer.
In June, Lilly announced that results from the Phase III MONARCH 2 study showed that abemaciclib in combination with fulvestrant (which is marketed as Faslodex) significantly improved progression-free survival compared to treatment with fulvestrant alone in women with HR+, HER2- advanced breast cancer who have relapsed or progressed after endocrine therapy. Patients with measurable disease treated with abemaciclib plus fulvestrant achieved an objective response rate of 48.1 percent (3.5 percent complete response), compared to 21.3 percent (0 percent CR) in patients treated with fulvestrant alone. Additionally, abemaciclib plus fulvestrant caused a greater degree of tumor shrinkage than fulvestrant alone.
In July, FDA accepted and filed Lilly’s new drug application for abemaciclib and gave the NDA a Priority Review designation. The NDA includes the company’s submission of abemaciclib for two indications: abemaciclib monotherapy for patients with hormone-receptor-positive, human epidermal growth factor receptor 2-negative advanced breast cancer who had prior endocrine therapy and chemotherapy for metastatic disease; and for abemaciclib in combination with fulvestrant in women with HR+, HER2- advanced breast cancer who had disease progression following endocrine therapy. This submission is based on the MONARCH 1 and MONARCH 2 studies, respectively. In 2015, FDA granted abemaciclib Breakthrough Therapy Designation based on data from the breast cancer cohort expansion of the company’s Phase I trial, JPBA, which studied the efficacy and safety of abemaciclib in women with advanced or metastatic breast cancer. Lilly intends to submit abemaciclib to European regulators in the third quarter of 2017 and to Japanese regulators before the end of 2017.
In February, Lilly and partner developer Incyte Corp. announced that additional detailed results from RA-BEAM – a pivotal Phase III study of baricitinib in the treatment of moderate-to-severe rheumatoid arthritis (RA) – were published in the New England Journal of Medicine. The publication includes supplementary data, which show that starting as early as week 8, and sustained through week 52, a higher proportion of patients taking baricitinib achieved ACR50 and ACR70 response – composite scores that represent at least 50 percent and 70 percent improvement, respectively, in multiple components of RA disease activity – compared to adalimumab (which is marketed as Humira).
These improvements were statistically significant compared to adalimumab at weeks 12, 20, 28, 32, and 40. At week 52, both ACR50 and ACR70 rates were higher in the baricitinib group compared to adalimumab, although only ACR 50 was statistically significant. A significantly higher proportion of patients taking baricitinib had low disease activity, assessed by the 28-joint Disease Activity Score (using high-sensitivity C reactive protein [DAS28-CRP]), Simplified Disease Activity Index (SDAI), and Clinical Disease Activity Index (CDAI) scores, compared to adalimumab at weeks 12 and 52.
Also during February, the European Commission granted marketing authorization for baricitinib, under the trade name Olumiant, for the treatment of moderate-to-severe active rheumatoid arthritis in adult patients who have responded inadequately to, or who are intolerant to, one or more disease-modifying antirheumatic drugs.
In April, FDA issued a complete response letter for Lilly and Incyte’s new drug application for baricitinib. The letter indicated that FDA was unable to approve the application in its current form. Specifically, FDA indicated that additional clinical data are needed to determine the most appropriate doses. FDA also stated that additional data are necessary to further characterize safety concerns across treatment arms. The companies disagree with the agency’s conclusions.
In June, Lilly and Incyte announced a new pooled analysis of data from eight baricitinib clinical trials, showing that baricitinib-treated and placebo-treated patients with moderate-to-severe rheumatoid arthritis had similar rates of serious infection incidents. Additionally, new data from the long-term extension of Phase III trials showed that two years of baricitinib treatment significantly lowered the rate of joint damage progression and maintained an overall low disease activity throughout the treatment period in these patients.
In August Lilly and Incyte announced that, after discussions with FDA, Lilly will resubmit the NDA for baricitinib before the end of January 2018. The resubmission package will include new safety and efficacy data. The companies anticipate that FDA will classify the application as a Class II resubmission, which will start a new six-month review cycle.
In June, Lilly announced positive results from three Phase III studies of galcanezumab, an investigational treatment for the prevention of episodic and chronic migraine. In the EVOLVE-1 and EVOLVE-2 studies, over the six-month treatment period, patients with episodic migraine treated with galcanezumab 120 milligram and 240 milligram doses experienced a statistically significantly greater decrease in the average number of monthly migraine headache days compared to patients treated with placebo, with statistically significant improvements observed at each month starting at one month of treatment. A statistically significantly greater percentage of patients treated with both doses of galcanezumab achieved at least a 50 percent, 75 percent, and 100 percent reduction in the number of migraine headache days compared to placebo over the six-month treatment period, in both studies after multiplicity adjustment.
In the REGAIN study, over the three-month treatment period, patients with chronic migraine treated with galcanezumab 120 milligram and 240 milligram doses experienced a statistically significantly greater decrease in the average number of monthly migraine headache days compared to patients treated with placebo. Statistically significant improvements for both doses of galcanezumab were observed at each month starting at one month of treatment. A statistically significantly greater percentage of patients also achieved at least a 50 percent reduction in the number of migraine headache days compared to placebo over the three-month treatment period (27.6 percent for 120 milligrams and 27.5 percent for 240 milligrams compared to 15.4 percent for placebo) after multiplicity adjustment.
Compared with placebo over the three-month treatment period, a statistically significantly higher percentage of patients treated with the 240 milligram dose of galcanezumab achieved at least a 75 percent reduction in the number of migraine headache days after multiplicity adjustment. Patients treated with the 240 milligram dose of galcanezumab also achieved a statistically significantly greater reduction in the number of monthly migraine headache days with acute medication use compared to placebo over the three-month treatment period after multiplicity adjustment. Patients treated with 240 milligrams of galcanezumab also saw statistically significant improvement in physical function compared to placebo over the three-month treatment period, as measured by both the RF-R domain score of the MSQ and PGI-S rating after multiplicity adjustment.
Based on these results, Lilly will submit a biologics license application to FDA for galcanezumab in the second half of 2017, followed by submissions to other regulatory agencies around the world.
Also in June, FDA granted Fast Track designation for tanezumab for the treatment of chronic pain in patients with osteoarthritis and chronic low back pain. The investigational humanized monoclonal antibody selectively targets, binds to, and inhibits nerve growth factor. Tanezumab is the first NGF inhibitor to receive Fast Track designation.
The Phase III global clinical development program for tanezumab is ongoing and includes six studies in about 7,000 patients with OA, CLBP, or cancer pain who did not experience adequate pain relief with approved therapies. Results are projected to begin reporting out in 2018. All studies are investigating subcutaneous administration of tanezumab by a health care provider once every eight weeks for treatment periods ranging from 16 to 56 weeks, followed by a 24-week safety follow-up period.
In August, Lilly announced that lasmiditan, recently acquired in the CoLucid transaction, met its primary endpoint in SPARTAN, a second Phase III study. At two hours following the first dose, a greater percentage of patients treated with lasmiditan were migraine pain-free compared to placebo.
These results were statistically significant across all three studied doses (50 milligrams, 100 milligrams, and 200 milligrams). Lasmiditan also met the key secondary endpoint for SPARTAN across all three studied doses, with a statistically significantly greater percentage of patients free of their most bothersome symptom compared with placebo at two hours following the first dose. In this study, patients chose their MBS from nausea, sensitivity to sound, or sensitivity to light. These findings are consistent with SAMURAI, the first pivotal Phase III study evaluating the safety and efficacy of lasmiditan for the acute treatment of migraine.
In this study, lasmiditan met both the primary and key secondary endpoints with statistical significance. Lilly plans to submit a new drug application for lasmiditan to FDA in the second half of 2018.