Eli Lilly Stops Developing Tabalumab Due to Efficacy Issues - Analyst Blog

Pipeline updates are highly awaited events in the pharma/biotech sector as they play an important role in deciding whether or not to invest in a particular company. These updates provide information on experimental drugs and at times give an insight into the commercial potential of the candidate once it is successfully developed and commercialized.

Late last week, Eli Lilly and Company (LLY) announced its decision to discontinue the development of its autoimmune disease candidate, tabalumab. The decision was based on insufficient efficacy results in the phase III ILLUMINATE program (consisting of two studies). In this program, tabalumab was being evaluated for the treatment of systemic lupus erythematosus (SLE), commonly known as lupus. The company’s decision was not based on safety concerns.

In the ILLUMINATE 1 study, tabalumab failed to meet the primary endpoint. Although a higher dose of tabalumab met the primary endpoint in the ILLUMINATE 2 study, collective data from both studies failed to achieve the required level of efficacy in comparison with existing treatments.

Moreover, both patient groups, treated with either tabalumab or standard of care therapy, showed a similar frequency of adverse events.

Eli Lilly said that it will work with investigators to conclude the phase III program appropriately to safeguard patient safety. The company intends to submit the above data in upcoming scientific venues.

We remind investors that in Feb 2013, Eli Lilly had announced its decision to stop developing tabalumab for rheumatoid arthritis based on insufficient efficacy results in a phase III program.

Eli Lilly expects to record a pre-tax charge of up to $75 million in the third quarter of 2014 owing to the discontinuation of the tabalumab program. The company expects a post-tax charge in the range of 4 cents – 5 cents per share in the third-quarter 2014.

Our Take

Although the discontinuation of the tabalumab program is disappointing, it is not very surprising given the candidate’s failure in the rheumatoid arthritis program. Currently, Eli Lilly is developing another autoimmune disease candidate, ixekizumab, for the treatment of psoriasis and psoriatic arthritis. In Aug 2014, the company presented statistically significant top-line results from the pivotal UNCOVER program on ixekizumab for moderate-to-severe plaque psoriasis compared to Enbrel and placebo.

Eli Lilly intends to file for ixekizumab’s approval in this indication in first half of 2015.

Eli Lilly carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the health care sector are Ligand Pharmaceuticals Inc. (LGND), Mallinckrodt plc (MNK) and Actavis plc (ACT). All these stocks carry a Zacks Rank #1 (Strong Buy).

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