Lilly, Incyte score another PhIII success for baricitinib, as market doubts linger

Eli Lilly ($LLY) and Incyte ($INCY) are now three for three in Phase III studies for baricitinib, an oral JAK inhibitor for rheumatoid arthritis that is on track for a marketing application and a real-world test of its lofty blockbuster reputation with analysts--while one already established rival from Pfizer ($PFE) lags well behind expectations.

Investigators say the drug hit its primary mark, proving non-inferior to methotrexate, the standard global starter drug for RA, based on the ACR20 response rate after 24 weeks of treatment. They also note that the drug outperformed methotrexate. Lilly and Incyte scored a successful head-to-head with Enbrel and Humira late last year and then followed up with a successful showdown with a placebo arm in the summer. One more Phase III study remains to complete the package for regulators, setting up a likely marketing start in 2016.

Like a lot of Eli Lilly's pipeline, baricitinib represents a fairly safe bet that the pharma giant can compete against similar therapies in the market. It won't break any new ground, but Cowen's Eric Schmidt has estimated peak sales at $1.5 billion.

In this case, Lilly will be following up on Xeljanz, a disappointment for Pfizer to date. Analysts had projected 2016 RA revenue for Xeljanz at $1.3 billion on the way to $3 billion in peak sales. But with only $224 million in revenue at the halfway point in 2015, doubts about what Lilly can do with this market linger.

It's not unusual for Lilly to pursue safe bets like this while continuing to swing away at potential home runs like solanezumab, its Phase III Alzheimer's drug. A success there--after an initial Phase III failure--would make a huge difference in persuading the market that Eli Lilly had finally mastered a workable pipeline strategy after years of setbacks and steadily falling revenue. A recent success demonstrating that its diabetes drug Jardiance helped reduce the risk of heart attack and stroke was also heralded as a major advance for patients, which should also help penetrate that huge market.

David Ricks, president of Lilly Bio-Medicines

Lilly has stabilized on the revenue side, with several new drug approvals, but much work remains to rehab its reputation. In the meantime, Lilly will gladly register this latest Phase III success.  

"Too many people with rheumatoid arthritis who are treated with methotrexate--commonly used across the disease continuum for 25 years--do not achieve adequate disease control, which can cause disability and impede productivity," said David Ricks, Lilly senior vice president and president of Lilly Bio-Medicines. "People living with RA who achieve adequate disease control can be more active with their families, in their careers and in their communities--emphasizing the importance of effective treatment options."

- here's the release

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