Shares of Eli Lilly and Co. fell about 3 percent in morning trading Wednesday after the drugmaker reported better-than-expected earnings, but flat revenue, for the first quarter.
Lilly also said regulators had agreed to a priority review of the company's potential stomach cancer treatment.
The Indianapolis-based company said the Food and Drug Administration will evaluate ramucirumab under a program designed for drugs that treat serious or life-threatening diseases for which there are few other therapies. Fast-track, or priority, status gives companies extra meetings and correspondence with regulators throughout the review process, and it allows the drugmaker to submit data as it compiles it.
Lilly is seeking approval for ramucirumab as a second treatment in patients with gastric and gastroesophageal junction cancers that have spread. Gastric cancer affects the stomach lining and often goes undetected while developing slowly. Gastroesophageal junction cancer forms where the esophagus connects to the stomach.
The company said last year that the experimental drug met goals for improved patient survival in late-stage clinical research.
Lilly also recently submitted a new type 2 diabetes treatment it developed with German drugmaker Boehringer Ingelheim to the FDA. The company said Wednesday that treatment and ramucirumab are the first two of what could be five drugs submitted to U.S. regulators this year.
Investors are watching Lilly's pipeline of developing drugs closely because the company is losing U.S. patent protection for some key products, and it needs to replace that revenue. Lilly lost patent protection for its all-time best selling drug, the antipsychotic Zyprexa, in late 2011, and its sales have plunged since being exposed to cheaper generic competition. The company also loses protection at the end of this year for current top-seller, the antidepressant Cymbalta.
In the first quarter, Lilly's earnings jumped 53 percent largely due to a $495 million payment for the transfer to former drug development partner Amylin Pharmaceuticals of commercial rights outside the United States for the diabetes treatment exenatide.
Lilly earned $1.55 billion, or $1.42 per share, in the three months that ended March 31. That compares to $1.01 billion, or 91 cents per share, in last year's quarter.
Not counting the exenatide payment, Lilly reported adjusted earnings of $1.14 per share. Analysts expected, on average, earnings of $1.05 per share, according to FactSet.
The drugmaker said its revenue stayed flat at $5.6 billion, as lower sales volume and unfavorable foreign exchange rates countered gains from higher prices. Analysts expected $5.67 billion in revenue.
Revenue from Cymbalta rose 19 percent, to $1.33 billion, and sales of the erectile dysfunction drug Cialis climbed 11 percent, to $515 million. But revenue from Zyprexa tumbled 49 percent, to $284.8 million.
The drugmaker also reaffirmed its forecast for 2013 earnings to range between $3.82 and $3.97 per share on $22.6 billion to $23.4 billion in revenue.
Analysts expect, on average, earnings of $3.90 per share on $23 billion in revenue.
Lilly shares were down 2.8 percent near midday, to $56.75 each. The company's stock price had risen 18.3 percent this yea after closing Tuesday at $58.33. It has been lifted by the broader markets and by investors’ rising hopes in the pipeline potential of all pharmaceutical companies.