Lilly still bullish on COVID-19 therapy, despite end of trial

Eli Lilly and Co. shares sank Tuesday morning after the Indianapolis-based drugmaker posted third-quarter earnings that came up short of expectations and federal officials pulled the plug on a study of a promising Lilly COVID-19 treatment on hospitalized patients.

However, Lilly officials said Tuesday they remain confident that the drug may stop COVID from developing in other patients. Researchers are still studying the drug in mild to moderately ill patients, to try to prevent hospitalization and severe illness.

Shares of Lilly fell 5.5% in mid-morning trading on the double helping of bad news, down $7.75 to $133.95.

“Clearly this quarter’s financial results came in below sell-side analysts’ projections,” CEO Dave Ricks said on a conference call, referring to predictions that analysts for large investment banks made for their clients for Lilly results.

Analysts were predicting the company would post earnings of $1.76 a share, based on a consensus by Zacks Investment Research. But Lilly came up short, reporting quarterly earnings of $1.54 a share.

Lilly pointed out that it is still pushing forward on several other studies, despite being stung by a decision from government officials to end a critical study for its antibody drug for advanced cases of COVID-19 in hospital patients.

Independent monitors had paused enrollment in the study of hospitalized patients two weeks ago because of a possible safety issue. On Monday, the National Institute of Allergy and Infectious Diseases, which sponsored the study, said a closer look did not verify a safety problem but found a low chance that the drug would prove helpful for hospitalized patients.

Lilly noted that three other trials for the antibody are continuing: for patients with mild to moderate symptoms, for recently diagnosed patients in ambulatory, non-hospital settings, and for prevention (or prophylaxis) in staff and residents in long-term care facilities. Those all are hefty markets, with big potential for medical treatments.

“While the results in hospitalized patients were disappointing, we don’t expect this to affect our chances of success in prophylaxis or in early treatment,” Dr. Dan Skovronsky, Lilly’s chief scientific officer, told analysts.

He said he was particularly encouraged to see that the neutralizing antibodies can help people overcome the virus more quickly, improve symptoms and prevent serious medical outcomes, such as hospitalizations and emergency-room visits.

Antibodies are proteins the body makes when an infection occurs. They attach to a virus and help it be eliminated. The experimental drugs are concentrated versions of one or two specific antibodies that worked best against the coronavirus in lab and animal tests.

On Tuesday morning, Lilly reported third-quarter earnings of $1.4 billion after one-time charges, up 3% from a year ago. Quarterly revenue climbed 5% to $5.7 billion, with much of the increase due to products launched in the past six years, including drugs for inflammatory diseases, diabetes and cancer.

In the third quarter, Lilly incurred expenses of $125 million to develop new therapies to fight COVID-19, “with the hope of soon offering a new treatment option for patients most at risk from the virus,” Ricks said.

The company also took special charges of $101 million for severance and restructuring “to reduce the company’s cost structure,” but did not say how many jobs were eliminated or where. The company also took a charge of $77.7 million related to business development transactions with Centrexion Therapeutics Corp. and AC Immune SA.