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Eli Lilly still in the hunt for effective COVID-19 treatment after trial failure

After a clinical trial of Eli Lilly and Co.'s COVID-19 treatment was halted due to a lack of efficacy, executives say the company is still in the antibody race and could see success with its candidates in earlier stages of the virus.

Indianapolis-based Lilly announced on Oct. 26 that the National Institutes of Health had stopped enrolling patients in a clinical trial testing a combination of the company's COVID-19 antibody therapy bamlanivimab in combination with Gilead Sciences Inc.'s Veklury in hospitalized patients due to a lack of efficacy. Veklury is the only therapy approved by the U.S. Food and Drug Administration to treat COVID-19.

Chief Scientific Officer Dan Skovronsky called the results of the trial "disappointing," but said during a third-quarter earnings call held Oct. 27 that better data is expected for the therapies in patients with earlier stages of the virus.

An emergency use authorization request is expected to be submitted to the U.S. Food and Drug Administration as early as November for a combination therapy of bamlanivimab and another therapy called etesevimab to treat COVID-19, according to Skovronsky. Lilly's Blaze-1 trial looking at ambulatory patients' responses to the single therapy and the combination therapy is still enrolling patients. The company also initiated a Blaze-2 trial that will look at the single therapy's effects in residents and staff of long-term care facilities.

While bamlanivimab in combination with Veklury did not show efficacy in hospitalized patients, the NIH-sponsored ACTT-2 trial for Lilly's rheumatoid arthritis drug Olumiant, or baricitinib, in combination with Veklury has demonstrated reduced time to recovery and a decrease in death compared to Veklury alone. Regulatory discussions for Lilly's authorization request for Olumiant are still ongoing. The drug was approved during the quarter for moderate to severe atopic dermatitis.

The doughnut hole

CEO David Ricks acknowledged that Lilly's quarterly results came in below analysts' projections and said pricing changes in the U.S. had a significant impact on third-quarter revenues.

Third-quarter non-GAAP EPS was $1.54, up 4% year over year, but below the S&P Capital IQ normalized EPS consensus estimate of $1.71.

Cantor Fitzgerald noted the miss on sales due to regulatory changes for the blockbuster diabetes drug Trulicity and EPS that was lower than expectations because of research-and-development spend on COVID-19 treatments. Lilly estimates $400 million will be spent this year on research into COVID-19 treatments. Revenue from those efforts would need to reach moderate levels in order to reach the higher end of revenue guidance for the year, which is between $23.7 billion and $24.2 billion. The company said that outcome is possible but not certain.

Nevertheless, Cantor Fitzgerald is confident in its positive outlook for the drugmaker compared to industry peers. Cantor said the company is "entering a period of earnings growth" and has a number of pipeline prospects with data readouts coming soon.

As for Trulicity, the drug notched $1.1 billion in revenue during the quarter, a 9% increase from the same period in 2019 but below analyst estimates. Sales of the therapy were dogged by several regulatory changes, including the Medicare Part D coverage gap, a complicated policy sometimes referred to as the "doughnut hole" that requires pharmaceutical companies to provide discounts on prescription drugs in certain circumstances.

Lilly expects this coverage gap will lead to a "high single-digit price decrease" on Trulicity for the full year, according to CFO Josh Smiley.

All eyes on Biogen

Lilly recorded a high profile failure of an Alzheimer's disease treatment in a phase 2/3 study of solanezumab alongside Roche Holding AG's gantenerumab in February. The company is expecting two more candidates in the disease area to read out in the first quarter of 2021, including monoclonal antibody donanemab. Skovronsky said the drug tackles the same mechanism as Biogen Inc.'s Alzheimer candidate aducanumab, which is being hotly anticipated across the industry.

Alzheimer's disease has proven to be difficult for pharmaceutical companies to target, leaving an unmet need in the patient community and significant opportunity for the first company to receive a regulatory nod.

Biogen has submitted aducanumab for regulatory approval in the U.S. and an advisory committee meeting to discuss the therapy is weeks away. Skovronsky said Lilly will look to the results of the FDA meeting as a sign of what may come with donanemab.

"The important observation here is around the evidence that lowering plaques can lead to cognitive benefits in Alzheimer's disease. I think we've seen it across a couple of data presentations now. And that's what gives us confidence in our own donanemab," Skovronsky said.