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Lilly Stops Lartruvo Promotion as Confirmatory Study Fails

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Eli Lilly and Company (LLY - Free Report) announced that a phase III study, evaluating Lartruvo (olaratumab) in combination with doxorubicin for treating metastatic soft tissue sarcoma (STS), failed to meet the primary endpoint of overall survival (OS). The phase III ANNOUNCE study examining Lartruvo plus doxorubicin — standard of care chemotherapy — compared with doxorubicin alone, was unable to confirm the clinical benefit of OS within full-study population as well as in leiomyosarcoma (LMS) sub-population. In both study arms, there was no difference in survival rate for either population.

Shares of Lilly were down 2.16% following the news. However, the stock has surged 36.5% in the past year against the industry’s decline of 0.7%.

 

We would like to remind investors that in October 2016, the FDA granted an approval to Lartruvo combined with doxorubicin for treating adult patients with advanced STS. Back then, the Lartruvo combo showed an OS benefit, which led to accelerated approval in the United States and a conditional marketing authorization in the EU, which was contingent upon verification of clinical benefit in a confirmatory study.

However, data from this confirmatory ANNOUNCE analysis failed to validate clinical benefit. Consequently, Lilly decided to suspend the promotion of Lartruvo while in discussion with global regulators to determine the next steps for the drug.

The company plans to present data from this study at an upcoming medical conference and publish the results in a medical journal.

Following this unexpected development, Lilly has decided to book a pre-tax charge in the $70-90 million range with regard to Lartruvo during first-quarter 2019. This in turn, will leave an impact on Lilly's 2019 earnings per share (EPS) guidance by $0.17. EPS for 2019 is expected in the band of $5.52-$5.62 on a reported basis and $5.90-$6 on a non-GAAP basis. Lilly is scheduled to announce fourth-quarter and 2018 earnings on Feb 13, 2019.

In the first nine months of 2018, Lartruvo generated sales of 221.2 million, soaring 53.6% year over year. Lartruvo is also being probed under phase II study in combination with gemcitabine and docetaxel for the treatment of advance STS.

Zacks Rank & Other Stocks to Consider

Lilly currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in large cap pharma include H Lundbeck A/S (HLUYY - Free Report) , Novo Nordisk A/S (NVO - Free Report) and Novartis AG (NVS - Free Report) . While H Lundbeck sports a Zacks Rank #1 (Strong Buy), Novo Nordisk and Novartis carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

H Lundbeck’s earnings estimates have been raised 5.2% for 2019 over the past 60 days.

Novo Nordisk’s earnings estimates have been revised 2.4% upward for 2019 over the past 60 days.

Novartis’ earnings estimates have moved 0.4% north for 2019 over the past 60 days. The stock has inched up 2.3% in a year.

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