You can scratch Eli Lilly's ($LLY) copycat version of Lantus off its short list of near-term approval prospects. Sanofi ($SNY) says it has filed a lawsuit against Lilly claiming that the pharma rival infringed four of its patents, which is likely to delay any launch until the middle of 2016.
Bernstein's Timothy Anderson started waving a red flag on this move more than a day ago, noting that an appeal would trigger a delay at the FDA that would either stretch out 30 months or to the point the courts ruled--which rarely happens within 30 months.
Strategically, it's another setback for Lilly, which has placed much of its hope for a desperately needed R&D turnaround in a slate of diabetes therapies, including the Lantus knockoff. Lantus is Sanofi's big earner in diabetes and stiff-arming Lilly in the courts will give it more time to hurry along its highly anticipated successor, U300.
"For LLY…the delay merely means that it will have to sit on its hands a bit longer before launching its version of Sanofi's drug," notes Bernstein.
Lilly, though, doesn't have the luxury of spending time sitting on its hands. The pharma giant is making the case that it can gain several new approvals this year--as well as for several years to come--and get revenue reignited next year after scraping bottom in 2014. The company has had one drug approval since 2009, failed to get a promised pair of approvals last year, and has left some analysts unconvinced that it has the kind of innovative new therapies that can earn enough money to replace the blockbusters that have been losing patent protection.
Among Lilly's top approval prospects now are dulaglutide, a GLP-1 drug, and empagliflozin, an SGLT2 drug. Both diabetes drugs would face stiff competition from rivals in the same field. And Lilly fanned worries over dulaglutide's future this week when executives told analysts that it only expects to demonstrate non-inferiority for dulaglutide compared to the dominant Victoza in an ongoing study. Then there's ramucirumab, a stomach cancer drug that failed in breast cancer and is expected to earn about $600 million a year in peak sales. Beyond that the top prospects include necitumumab for lung cancer and evacetrapib, a long shot for cholesterol control that amounts to another Hail Mary from the R&D division, which is seeing its budget trimmed by up to a billion dollars this year.
As a result of the delay, Anderson cut Lilly's earnings per share estimate by 3% in the 2015-2020 time frame (Lilly is partnered with Boehringer on the drug) while boosting Sanofi's EPS estimate by 6%.
Lilly clearly has its back up against a wall, and has had for several years now. The margin for error has been eliminated.
- here's the press release
Special Report: The top Phase III R&D setbacks of 2013 - Ramucirumab - Eli Lilly