Shares of Eli Lilly and Co. tumbled Thursday after the drugmaker said a potential breast cancer treatment missed its main goal in a late-stage study comparing it to a fake drug.
The Indianapolis-based firm no longer plans to seek regulatory approval for the drug, ramucirumab, in patients with a form of breast cancer that has spread. However, Lilly will seek approval to use the treatment in combination with chemotherapy in stomach cancer patients after ramucirumab performed better in a separate study on those patients.
Lilly shares fell 3.3 percent, or $1.71, to $50.90 each, Thursday before markets opened, then fell another 3.4 percent in morning trading, to $50.85.
The stock's closing price of $52.61 on Wednesday had marked a gain of 6.7 percent so far this year.
In the breast cancer study, Lilly said researchers saw no statistically significant difference in progression-free survival when comparing patients taking ramucirumab and the chemotherapy drug docetaxel with those taking a placebo and docetaxel. Progression-free survival measures the time from the start of treatment until a patient's cancer begins advancing again or the patient dies.
An early analysis of overall survival also showed no benefit for patients on ramucirumab.
The drug did meet its main goal of improved overall survival when studied in patients with advanced gastric cancer who took it along with another chemotherapy drug, paclitaxel. It also met a secondary goal of improved progression-free survival.
Lilly will seek approval from regulators for that use. It also is studying ramucirumab in colorectal and lung cancers and expects more late-stage research results next year.
Investors had relatively low expectations for the drug in treating breast cancer, Bernstein analyst Dr. Tim Anderson said in a research note. But he also has said that the commercial opportunity in breast cancer that has metastasized, or spread, is significant.
Anderson expects the drug to generate about $600 million in annual revenue by 2020 from its use in treating gastric cancer.
Investors are eager to see Lilly produce new sources of revenue because it is going through a wave of patent expirations that expose key drugs to cheaper generic competition. Lilly lost patent protection for its all-time best selling drug, the antipsychotic Zyprexa, in late 2011 and will lose protection at the end of this year for its current top-seller, the antidepressant Cymbalta.