Lilly's new insulin is likely DOA after latest delay, analyst says

Eli Lilly's ($LLY) already-delayed new insulin has run into another roadblock, as potentially harmful liver side effects have sent the company back to the clinic, putting off a potential regulatory filing by a year or more and leading a top analyst to eulogize the program.

At issue is Lilly's long-acting insulin peglispro, a once-a-day alternative to Sanofi's ($SNY) top-selling Lantus. Lilly had once planned to submit the treatment to the FDA this quarter but is now retreating to get more clinical data on the insulin's liver toxicity. That means gearing up for another time-consuming trial, and Lilly says it can't specify the length of the delay but that any peglispro submission is likely to come "after 2016."

Which is to say there's "a high likelihood that the program is dead," Bernstein analyst Tim Anderson said in a note to investors, "from a regulatory standpoint and/or a commercial standpoint."

Peglispro's liver risks have been well established over the past year or so, as a wealth of positive Phase III efficacy data was weighed down by the fact that the insulin led to statistically significant increases in liver fat. Those signals were apparently enough to convince Lilly to modify its late-stage program, perhaps informed by the FDA's surprise rejection of Novo Nordisk's ($NVO) long-acting Tresiba over toxicity issues.

Even if things work out, the indefinite delay means Lilly would be severely late to the party for extended-action insulins. Sanofi is expecting FDA approval in the coming months for Toujeo, a long-acting successor to Lantus, while the once-spurned Novo is making progress with its agency-mandated outcomes trial and could launch Tresiba by 2017.

But Lilly is staying optimistic, pointing out that among the 6,000 patients treated in peglispro's development program, not one has reported drug-induced liver impairment.

Enrique Conterno, president of Lilly Diabetes

"While we are disappointed with the delay, we feel it is important to gain a better understanding of the potential effects of (peglispro) on the liver before asking regulators to review the drug for approval," Lilly Diabetes President Enrique Conterno said in a statement. "Our priority is delivering safe and innovative medicines to meet the needs of people living with diabetes, and that's what we aim to accomplish with this additional work."

If peglispro amounts to yet another Phase III failure for Lilly's R&D organization, there is a silver lining, according to Anderson. Alongside Boehringer Ingelheim, Lilly is at work on a biosimilar or Sanofi's Lantus, and if peglispro falls out of the picture, the partners could aggressively price their knockoff without Lilly having to worry about cannibalizing sales for a long-acting product.

That would likely be a cold comfort for Lilly, which has spent big on 7 Phase III trials for peglispro in hopes of establishing a major new pillar in its diabetes franchise. In each, the insulin has consistently bested Lantus in controlling patients' blood glucose levels, and Lilly has hinted at long-term plans for a combination of peglispro and its recently approved GLP-1 treatment Trulicity.

- read the statement