High Stakes 2013

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With the Zyprexa era over, Lilly is betting big on its ability to innovate in the pipeline.

This past year was the first of three of what Lilly executives are calling the “YZ” years – the years after the expiration of patent protection for the antipsychotic Zyprexa, for many years the company’s top seller. With the fate of the company at stake and limited growth in the rest of the product portfolio, Lilly’s leaders must have spent many hours in 2012 hoping that the compounds at the top of the company’s pipeline would show signs of future success. If that was indeed the case, the answers to their hopes so far have been decidedly mixed, with positive study data from some compounds – particularly in the diabetes and oncology areas – but failure in others, especially Alzheimer’s. The successes in the pipeline, though, have been enough to fill Lilly’s leaders with confidence about the company’s future, but tough times still await in the short term.

“While there is a lag between our patent expirations and the next wave of new product launches, we have built the strongest pipeline in our history,” says John C. Lechleiter, Ph.D., chairman, president, and CEO of Lilly. “We believe our focus on the pipeline represents the right path for Lilly, and our recent performance gives us increasing confidence in our ability to execute our innovation strategy, to navigate through this challenging period, and to return to growth in the years ahead. I am proud of what Lilly people and our many partners accomplished together in 2012, and I’m excited about our prospects for 2013 and beyond. While there remain plenty of challenges ahead, we clearly have the wherewithal to meet and overcome these challenges.”

Lilly generated top-line revenue of $22.6 billion in 2012, a drop of 6.9 percent versus the 2011 result. Net income was down 6 percent to $4.09 billion, and earnings per share decreased 24 cents to $3.66. The top line bounced back a bit in the first half of 2013, rising 2.9 percent year-over-year to $11.53 billion. First-half 2013 net income jumped up 42.3 percent to $2.75 billion and earnings per share rose 80 cents to $2.53. Company leaders are projecting full-year earnings per share for 2013 at between $4.05 and $4.15.

Product performance

With Zyprexa losing patent protection in 2011, the depression drug Cymbalta took over the top-selling position in Lilly’s portfolio in 2012, though its reign will be brief. The product earned $4.99 billion in sales for the year, a 20 percent improvement over 2011. In July 2012, Lilly announced that the company had met the requirements for pediatric exclusivity for Cymbalta, earning the product an additional six months of U.S. market exclusivity, through December 2013. In the first half of 2013, Cymbalta sales totaled $2.83 billion, an improvement of 20.8 percent compared with the first half of 2012.

The lung cancer drug Alimta generated $2.59 billion in sales for Lilly during 2012, an improvement of 5.4 percent over the previous year. In September 2012, Lilly announced that the Phase III POINTBREAK trial did not meet its primary endpoint of improved overall survival for patients with nonsquamous non-small cell lung cancer who were randomized to receive a combination of Alimta with Avastin and carboplatin induction followed by Alimta plus Avastin maintenance – the Alimta arm – compared to the combination of paclitaxel with Avastin and carboplatin followed by Avastin maintenance – the paclitaxel arm. The study did meet one of its secondary endpoints of improved progression-free survival for the Alimta arm. In October 2012, though, the company announced that patients could receive Alimta as a maintenance therapy following first-line Alimta plus cisplatin for locally advanced or metastatic nonsquamous non-small cell lung cancer. FDA approved the label inclusion of Phase III data that demonstrated progression-free and overall survival advantages in the continuation maintenance setting for these patients. In June 2013, results were released from the PRONOUNCE trial comparing an Alimta and carboplatin doublet regimen to a paclitaxel, carboplatin and Avastin triplet regimen. The study did not achieve its primary superiority endpoint of improved progression-free survival without grade four adverse events. In the first half of 2013, Alimta sales rose 1.6 percent to $1.29 billion.

Humalog, Lilly’s leading diabetes brand, stayed stable in 2012, with sales edging up 1.2 percent to $2.4 billion. Humalog’s patent protection in the United States expired in May 2013, but as of yet, no other company has attempted to market a generic biosimilar of the product. In the first half of 2013, Humalog sales rose 4.7 percent to $1.26 billion.

Sales of the erectile dysfunction drug Cialis also rose in 2012, increasing 2.7 percent to $1.93 billion. In October 2012, the European Commission approved Cialis 5 milligrams for once-daily use for the treatment of the signs and symptoms of benign prostatic hyperplasia. Cialis is now the only medication in the EU to provide a single treatment option for men with both ED and BPH. In July, study results published in the Journal of Sexual Medicine showed a greater percentage of men who had an incomplete response to as-needed PDE5 inhibitor treatment returned to normal erectile function when given Cialis once daily, compared to placebo, as measured by the erectile function domain of the International Index of Erectile Function. In a pre-specified secondary measure, Cialis significantly improved erectile function scores versus placebo in those men who had an incomplete response to as-needed PDE5 treatment. In the first half of 2013, Cialis sales advanced 12.1 percent over same-time 2012 to $1.04 billion.

After losing its U.S. and European patent protection in 2011, the schizophrenia drug Zyprexa continued to shed sales in 2012, with a dropoff from $4.62 billion to $1.7 billion. In the first half of 2013, Zyprexa sales decreased 39.7 percent to $568 million. Zyprexa will continue to have patent protection in Japan until 2015.

Lilly’s second-leading diabetes product, Humulin, dropped off slightly in 2012, falling 0.8 percent to $1.24 billion in global sales. U.S. sales of Humulin were negatively affected by the product’s removal from a large formulary in 2012, as well as the continued decline in the market for human insulin and the termination of the Humulin ReliOn agreement with Walmart. In the first half of 2013, Humulin sales were up 4.6 percent to $639 million.

Forteo, for osteoporosis, enjoyed a nice bounce in 2012 with sales up 21.2 percent to $1.15 billion, the first time the product crossed the blockbuster barrier. This growth was driven in particular by increased demand in Japan. In August 2012, Lilly announced data from a Phase III trial comparing the effects of Forteo and risedronate on back pain in postmenopausal women with osteoporotic vertebral fractures. The study showed no difference between Forteo and risedronate on the primary endpoint of at least a 30 percent reduction in worst back pain from baseline to six months of therapy, as assessed by a numeric rating scale in each treatment group. However, there were statistically significant differences in favor of Forteo in some exploratory measures, including greater increases in bone mineral density and fewer patients with new vertebral fractures. In May, new data from another study showed that Forteo significantly increased lumbar spine volumetric bone mineral density compared to risedronate in men with glucocorticoid-induced osteoporosis. Glucocorticoid-induced osteoporosis is caused by excess intake of glucocorticoids, a class of steroid hormones used to treat inflammatory, autoimmune, and allergic disorders. In the first half of 2013, Forteo sales rose 5.5 percent to $578 million.

Lilly’s other leading osteoporosis brand, Evista, shed some sales in 2012, falling 5.3 percent to $1.01 billion. Evista sales fell 0.6 percent in the first half of 2013 to $519 million. Patent protection for Evista is expected to expire in March 2014.

Sales of the ADHD drug Strattera barely moved in 2012, increasing just 0.2 percent to $621 million. In the first half of 2013, Strattera sales rose by 7.4 percent year-over-year to $335 million.

The largest sales bounce in Lilly’s portfolio in 2012 came from its cardiovascular product Effient, which jumped up 50.8 percent to $457 million. In the first half of 2013, Effient sales increased 11.5 percent versus the one-year-earlier period to $253 million.

In October 2012, Lilly and partner marketer Daiichi Sankyo announced new results of two retrospective, observational, comparative effectiveness studies of U.S. hospital data comparing rates of readmission for subsequent heart attack and initial hospitalization costs among patients with acute coronary syndromes treated with a percutaneous coronary intervention and antiplatelet therapy, including Effient or Plavix. The first study evaluated the rate of rehospitalization for acute myocardial infarction and bleeding at both 30 days and 90 days after discharge for ACS-PCI patients treated with Effient compared to Plavix. Effient-treated patients had a significantly lower adjusted rate of rehospitalization for acute myocardial infarction than Plavix-treated patients at 30 days and 90 days following ACS-PCI discharge. The adjusted rates of bleeding-related rehospitalization were not different between Effient-treated and Plavix-treated patients at 30 days or 90 days post-discharge. In the pivotal randomized control trial, TRITON-TIMI 38, the risk of serious bleeding was significantly higher with Effient versus Plavix.

The second study evaluated use of healthcare resources by Effient-treated ACS-PCI patients compared to Plavix-treated patients during index hospitalization (hospitalization that qualified the patients for entry into the study), as measured by hospital costs. Adjusted estimates of average hospitalization costs for patients receiving Plavix or Effient were $17,519 (plus or minus $2,548) and $17,139 (plus or minus $2,560) respectively – a cost savings of $380 (p<0.05) for Effient-treated patients during the index hospital stay. Results were consistent across subgroups by subtype of ACS (STEMI, NSTEMI, and unstable angina).

“In the current healthcare environment, it is important to understand the comparative effectiveness of antiplatelet therapies on rehospitalization rates for subsequent events, such as heart attacks, and index hospitalization costs associated with their use in the real-world setting,” says lead study investigator Jay P. Bae, Ph.D., health economist, Health Outcomes Research, Global Health Outcomes, Lilly. “The findings of these studies expand on data from clinical studies and previous health outcomes research.”

Partnerships and acquisitions

In April 2013, Lilly Diabetes announced the global expansion of its collaboration with Disney Publishing Worldwide. The program was expanded internationally based on the success of the initiative in the United States, which began in 2011. The goal of the program is to bring thoughtful educational resources to families of children with diabetes, including a series of custom books jointly created by Lilly Diabetes and DPW for children of various ages and stages of life who are living with type 1 diabetes. The books, available through diabetes healthcare professionals, will initially be translated and available in 18 countries.

“Lilly Diabetes’ objective is to bring safety, health, comfort, and a bit of magic to children worldwide,” says Andrew Hodge, VP, International, Lilly Diabetes. “We saw the positive impact our collaboration with Disney Publishing Worldwide had on families living with type 1 diabetes in the United States over the last two years, and we are excited to expand our reach globally.”

By expanding this collaboration, Lilly Diabetes and DPW hope to reach even more families who have been impacted by type 1 diabetes, offering stories of familiar characters, such as Mickey Mouse and his friend Coco, the fun-loving monkey who has type 1 diabetes.

Also in April, Lilly acquired two investigational positron emission tomography tracers from Siemens Medical Solutions USA Inc. The tracers are intended to image tau (or neurofibrillary) tangles in the brain, one of two known hallmarks of Alzheimer’s disease. Based on studies of samples obtained at autopsy, the amount and location of tau tangles in an Alzheimer’s disease patient’s brain is thought to correlate with the severity of the disease. No approved diagnostics currently exist to detect tau tangles in living patients, creating challenges for scientists working to understand the progression of the disease and how therapies may impact it.

Lilly will initially focus on incorporating this new technology into its anti-amyloid and anti-tau R&D programs. Use of a tau tangle tracer could enable tailoring and early identification of at-risk patients, and potentially provide a marker for treatment response. Lilly has the option to commercialize the tracers. The tracers will be developed and validated by a team at Avid Radiopharmaceuticals, Lilly’s wholly owned subsidiary focused on molecular imaging.

“The acquisition of these tau tangle tracers builds on our 25-year commitment of investing in Alzheimer’s disease research and development to bring new medicines to patients facing the terrible consequences of Alzheimer’s disease,” says Jan M. Lundberg, Ph.D., executive VP, science and technology, and president, Lilly Research Laboratories. “We are hopeful that this technology will both enhance our understanding of tau and its role in Alzheimer’s disease, and contribute to the development of our anti-amyloid and anti-tau based therapies to treat this disease.”

In August, Lilly and the health and wellness company Humana announced a joint research collaboration aimed at improving the healthcare of their members and patients. Under the partnership, the companies will utilize their expertise and resources to identify and analyze data and information with a focus on improving healthcare quality and outcomes. The partnership, executives say, reflects a shared commitment by both companies to address the challenges of improving quality of care and reducing treatment costs in today’s complex and changing healthcare environment.

Under the terms of the multi-year agreement, the companies will conduct a range of studies related to various disease states. Study methodologies include impact of interventions on outcomes, adherence programs, disease management, and pharmacoeconomics. The initial project is aimed at investigating patient characteristics associated with increased healthcare costs in people with type 2 diabetes. This retrospective analysis uses de-identified medical, pharmacy and laboratory claims data, in addition to research algorithms focused on exploring patient attitudes and behaviors. Future studies may use this information to identify modifiable characteristics that can be targeted with behavioral and other therapeutic interventions.

“We are pleased to partner with Humana on research that will help benefit patients facing a variety of diseases, including diabetes,” said Dara Schuster, M.D., medical fellow, Lilly Diabetes. “Working together, we hope to provide patients with insights and guidance that will help them tailor their care to best match their individual needs.”

Comprehensive Health Insights, a wholly owned subsidiary of Humana, will serve as the research engine in the collaboration. Since 2008 CHI has partnered with a wide range of industry partners to perform health economics and outcomes research using Humana’s data assets.

Research and development

Although Lilly’s present portfolio of marketed products may have lacked fireworks in 2012, the company’s late-stage pipeline is packed, with more than a dozen compounds in Phase III development or awaiting approval.

In August 2012, Lilly announced that the primary endpoints – both cognitive and functional – were not met in either of the two Phase III, double-blind, placebo-controlled solanezumab EXPEDITION trials in patients with mild-to-moderate Alzheimer’s disease. However, a pre-specified secondary analysis of pooled data across both trials showed statistically significant slowing of cognitive decline in the overall study population of patients with mild-to-moderate Alzheimer’s disease. In addition, pre-specified secondary subgroup analyses of pooled data across both studies showed a statistically significant slowing of cognitive decline in patients with mild Alzheimer’s disease, but not in patients with moderate Alzheimer’s disease. Following discussions with regulators in the United States, Europe and Canada, Lilly announced plans in December to conduct an additional Phase III study of solanezumab in patients with mild Alzheimer’s disease. The study was expected to begin by the third quarter of 2013.

Also in August 2012, Lilly stopped Phase III clinical studies investigating pomaglumetad methionil, also known as mGlu2/3, for the treatment of patients suffering from schizophrenia. The decision was made after a recently conducted independent futility analysis concluded HBBN, the second of Lilly’s two pivotal studies, was unlikely to be positive in its primary efficacy endpoint if enrolled to completion.

In October 2012, Lilly announced that the REGARD trial, a Phase III study of ramucirumab in patients with metastatic gastric cancer, met its primary endpoint of improved overall survival and also showed prolonged progression-free survival. The REGARD trial compared ramucirumab and best supportive care to placebo and best supportive care as a second-line treatment in patients with metastatic gastric and gastroesophageal junction cancers. REGARD is one of two ramucirumab Phase III studies in gastric cancer. RAINBOW, a Phase III trial of ramucirumab in combination with paclitaxel, completed patient enrollment in September 2012.

“We are pleased with this data of ramucirumab used as monotherapy in a second-line setting in this difficult-to-treat disease,” says Richard Gaynor, M.D., VP, product development and medical affairs for Lilly Oncology. “It reinforces our confidence in the ramucirumab development program, in which we currently have six Phase III studies ongoing in five tumor types – breast, colorectal, gastric, hepatocellular and lung cancer.”

In November, Lilly and partner developer Incyte announced 24-week results from the continuation of an ongoing Phase IIb study of baricitinib, an orally available janus kinase inhibitor, in patients with moderate-to-severe rheumatoid arthritis who had an inadequate response to treatment with methotrexate. Additionally, magnetic resonance imaging technology was used in a sub-study to examine the effect of baricitinib on joint erosion and other markers of structural changes in and around the joint. Patients taking baricitinib 4 milligrams or 8 milligrams once daily reported significant differences in ACR20, ACR50, and ACR70 responses compared with patients taking placebo. Data from the 12-week to 24-week portion of the study, which did not include a placebo control, showed that patients who continued to receive 2-milligram, 4-milligram, or 8-milligram baricitinib once-daily doses maintained or improved ACR20, ACR50, and ACR70 responses. Baricitinib is advancing into Phase III development as a potential treatment for rheumatoid arthritis and is in Phase II development as a potential treatment for psoriasis and diabetic nephropathy.

In February, Lilly halted the Phase III rheumatoid arthritis program for tabalumab, an anti-BAFF (B cell activating factor) monoclonal antibody, due to lack of efficacy. The decision was not based on safety concerns. The tabalumab Phase III program for systemic lupus erythematosus, ILLUMINATE, is ongoing and will continue as planned.

In May, Lilly announced Phase III clinical trial results from the PRELUDE study of enzastaurin, which explored the molecule as a monotherapy in the prevention of relapse in patients with diffuse large B-cell lymphoma. The study failed to show a statistically significant increase compared to placebo in disease-free survival in patients at high risk of relapse following rituximab-based chemotherapy. The company has halted development of enzastaurin.

In June, Lilly announced safety and efficacy results from three Phase III trials for dulaglutide, an investigational, long-acting glucagon-like peptide 1 (GLP-1) receptor agonist being studied as a once-weekly treatment for type 2 diabetes. In the trials, dulaglutide 1.5 milligrams was superior to placebo and to exenatide metformin, and sitagliptin in reducing HbA1c levels. In addition, a greater percentage of patients treated with dulaglutide achieved an HbA1c goal of less than 7 percent versus all active comparators.

“These results are a promising step forward in our effort to provide a new, once-weekly GLP-1 treatment option, giving patients another choice to help manage their diabetes,” says Sherry Martin, M.D., senior medical director, Lilly Diabetes. “Dulaglutide represents an important component of our diabetes portfolio, as it could help us offer a broader range of options to patients across the diabetes spectrum.”

Also in June, Lilly and partner developer Boehringer Ingelheim announced results of a 52-week Phase III clinical trial of the investigational agent empagliflozin which showed statistically significant reductions in HbA1c at week 24 with the addition of empagliflozin to existing oral antihyperglycemic therapy in adults with type 2 diabetes and mild-to-moderate kidney impairment. At the same time, the two companies announced results of two additional Phase III 24-week clinical trials of empagliflozin added to metformin with and without the addition of sulfonylurea, in people with type 2 diabetes, which showed statistically significant improvements in blood glucose as measured by reductions in HbA1c after 24 weeks among people who received empagliflozin. The companies also announced results of a 78-week Phase III clinical trial of empagliflozin as add-on to basal insulin in adults with type 2 diabetes, showing that empagliflozin 10 milligrams or 25 milligrams plus insulin produced statistically significant reductions in HbA1c (average blood glucose) compared with insulin alone at the study’s primary endpoint, week 18, as well as at week 78.1. Empagliflozin was submitted to both FDA and the European Medicines Agency for approval in March 2013.

Empagliflozin is not the only product of the BI/Lilly diabetes partnership presently awaiting approval. In July, the two companies’ marketing authorisation application for LY2963016, an investigational basal (long-acting) insulin for the treatment of type 1 and type 2 diabetes, was accepted for review by the European Medicines Agency.

“Long-acting insulin is a mainstay treatment for many people with diabetes, and we anticipate that insulin glargine will continue to be widely used for many years to come,” says Gwen Krivi, Ph.D., VP, Lilly Diabetes product development. “We are pleased that the EMA’s acceptance of our application brings us closer to offering a new insulin glargine product to clinicians and their patients, coupled with the expertise they expect from Lilly and Boehringer Ingelheim.”

In August, Lilly announced that SQUIRE, a recently completed Phase III study, met its primary endpoint, finding that patients with stage IV metastatic squamous non-small cell lung cancer experienced increased overall survival when administered necitumumab in combination with gemcitabine and cisplatin as a first-line treatment, as compared to chemotherapy alone. The most common adverse events occurring more frequently in patients on the necitumumab arm were rash and hypomagnesemia. Serious, but less frequent, adverse events occurring more often on the necitumumab arm included thromboembolism.

“We are pleased with these data which represent a potential advance in treatment for patients with squamous non-small cell lung cancer, which is a difficult cancer to treat,” Dr. Gaynor says. “If approved, necitumumab could be the first biologic therapy indicated to treat patients with squamous lung cancer.”

Several other Lilly compounds are also in Phase III trials, including edivoxetine for major depression, evacetrapib for high-risk vascular disease, and ixekizumab for psoriasis and psoriatic arthritis.

Additionally, the diabetes product Tradjenta, approved by FDA in 2011, continues to bring in positive study results and label expansions. In July 2012, Jentadueto, the Tradjenta/metformin combination product, earned marketing approval in Europe (it had already been approved by FDA in January 2012). In August 2012, FDA approved a supplemental new drug application for Tradjenta tablets for use as add-on therapy to insulin.

In October 2012, Lilly and Boehringer Ingelheim announced data from three pooled analyses for Tradjenta showing that the compound, alone or in combination with other diabetes therapies, lowered hemoglobin A1c (HbA1c or A1C) in elderly patients with type 2 diabetes, as well as in adults with type 2 diabetes with diabetic nephropathy (renal disease). Data from a fourth study found adding Tradjenta to a stable dose of basal insulin improved blood glucose control over 52 weeks without an additional risk of hypoglycemia or weight gain compared to placebo. In March, the two companies launched a Phase IIIb trial to evaluate the glycemic efficacy and safety of Tradjenta in patients with type 2 diabetes with prevalent albuminuria (defined as urinary albumin-to-creatinine ratio (UACR) 30-3000 mg/g creatinine), while remaining on current standard therapy for diabetic nephropathy.

In June, the two companies announced results from a new study in which Tradjenta demonstrated statistically significant reductions in blood glucose levels (HbA1c) after 12 weeks (the study’s primary endpoint) in adults with type 2 diabetes with moderate-to-severe renal impairment, compared with placebo. That same month, results from two other Phase III studies showed that Tradjenta, as monotherapy and in combination with metformin, improved blood glucose control in people with type 2 diabetes from China, Malaysia, and the Philippines. Then in August, data published in The Lancet showed that elderly people with type 2 diabetes treated for 24 weeks with Tradjenta experienced significant reductions in blood glucose levels (HbA1c) compared with those receiving placebo. In addition, the overall safety and tolerability profile of Tradjenta was similar to placebo.

Product sales and financial performance

Cymbalta $4,994 $4,162
Alimta $2,594 $2,461
Humalog $2,396 $2,368
Cialis $1,927 $1,876
Zyprexa   $1,701 $4,622
Humulin $1,239 $1,249
Forteo $1,151 $950
Evista $1,010 $1,067
Strattera $621 $620

All sales are in millions of dollars.

  2012 2011
Revenue $22,603 $24,287
Net Income $4,089 $4,348
Diluted EPS $3.66 $3.90
R&D $5,278  $5,021
  1H13 1H12
Revenue $11,532 $11,203
Net Income $2,754 $1,935
Diluted EPS $2.53 $1.73
R&D $2,679 $2,472

All figures are in millions of dollars except EPS.