By Peter Loftus 

Eli Lilly & Co. reported lower-than-expected quarterly earnings due to pricing pressure on top products, while the drugmaker said it would proceed with plans to introduce a new Covid-19 antibody treatment despite a setback in one of several clinical studies of its uses.

The Indianapolis-based company said it would continue pursuing U.S. authorization for an antibody drug to treat Covid-19 patients in the early course of illness and with a mild to moderate version of the disease. That comes after the National Institute of Allergy and Infectious Diseases said late Monday that it would close a study of a different use of that drug, later in the course of the disease in hospitalized patients. The institute concluded the antibody drug didn't provide a clinical benefit to hospitalized patients.

Eli Lilly Chief Executive David Ricks said Tuesday that the halted study doesn't signal significant concerns for LY-CoV555's safety. "We've learned antibodies are more likely to work early in the disease and are less likely to be effective in later stages of the disease," he said in an interview after the company reported its third-quarter results.

A separate study had shown that the antibody drug reduced hospitalization rates in people with mild to moderate Covid-19, and this is the basis for Lilly's request for U.S. regulators to authorize its use. Eli Lilly plans to continue testing the drug in other studies, in patients early in the course of their disease, and in people at risk of infection, including staff and residents at nursing homes.

Lilly shares dropped 6.9% to $131.90 Tuesday, which analysts attributed to investor disappointment in the antibody study halt as well as third-quarter results that missed expectations. The company lowered its profit guidance for 2020, though it projected continued recovery in the health-care sector despite the continuing pandemic.

The company said it expects new prescriptions for patients to continue to recover in the U.S. Company executives also expect general health-care activity to accelerate following a slump earlier in the pandemic as providers shift to telehealth.

Jared Holtz, a health-care equity strategist at financial-services firm Jefferies, called the quarterly results slightly disappointing and said the setback for the Covid-19 antibody drug makes Lilly a less formidable player in the hunt for treatments.

Drugmakers and health officials believe antibody-based drugs may fill a treatment gap for Covid-19 and provide temporary protection, even before any Covid-19 vaccine becomes available. Regeneron Pharmaceuticals Inc. is developing an antibody treatment that has been shown to reduce virus levels and improve symptoms in Covid-19 patients who weren't hospitalized.

The study of Eli Lilly's drug that the NIAID halted was testing whether adding the LY-CoV555 antibody to standard treatment -- including the antiviral drug remdesivir -- would improve outcomes in hospitalized Covid-19 patients versus standard treatment alone. The study was designed to isolate the effect of the Lilly antibody.

Enrollment in the study of the drug combination had been paused earlier this month over a potential safety concern stemming from a difference in the clinical status between Covid-19 patients who received the Lilly drug and those who got a placebo. An independent board overseeing the trial that identified the disparity later said it found no significant differences in safety outcomes between those two sets of patients. The board instead decided to recommend that no more trial participants be given the Lilly drug because of "lack of clinical benefit" in hospitalized patients, according to the NIAID.

Mr. Ricks said it was reassuring that the board didn't find safety differences between the patients who got the antibody treatment and those who didn't. He said he couldn't predict the timing of an FDA decision, but "from a public health perspective we certainly could use the therapy right now in early disease to reduce hospitalization risk."

Lilly and federal researchers continue to test the antibody in several different ways, including whether it can prevent disease in staff and residents of nursing homes where an outbreak has started.

Lilly has also requested U.S. authorization of its rheumatoid-arthritis drug Olumiant as a treatment for Covid-19, based on a study showing it helped hospitalized patients recover more quickly.

The company Tuesday reported a third-quarter profit decline to $1.21 billion, or $1.33 a share, from $1.25 billion, or $1.37 a share, in the same three-month period a year earlier. On an adjusted basis excluding certain items, Eli Lilly's profit was $1.54 a share. Analysts polled by FactSet had forecast an adjusted profit of $1.71 a share.

Revenue rose 5% to $5.74 billion from $5.48 billion a year earlier, but was short of the analysts' forecast of $5.88 billion.

The revenue shortfall came primarily from lower-than-expected sales of Lilly's top drug, the diabetes treatment Trulicity. Lilly said that although it made modest list-price increases in the U.S., it had lower realized prices due to changes in its estimates of rebates and discounts for the drug. As a result, sales growth was lower than prescription volume growth.

Overall, lower realized prices reduced sales growth by 5 percentage points for the quarter, Lilly said. Higher research-and-development expenses in the third quarter also weighed on earnings, including $125 million for potential Covid-19 therapies. Eli Lilly said it expects its full-year expenses for research and development related to Covid-19 to be $400 million.

The company reiterated its forecast of full-year revenue of $23.7 billion to $24.2 billion, but said it would need moderate revenue from potential Covid-19 treatments to hit the higher end of the range, which is possible but not certain.

The drugmaker said it expects full-year earnings per share to be $6.20 to $6.40 a share. The company's previous forecast foresaw earnings per share of $6.48 to $6.68. On an adjusted basis, Lilly reiterated a forecast of $7.20 to $7.40 per share.

--Matt Grossman contributed to this article.

Write to Peter Loftus at


(END) Dow Jones Newswires

October 27, 2020 17:31 ET (21:31 GMT)

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