Eli Lilly ends development of promising insulin drug

Eli Lilly and Co. has scrapped plans to develop a potential diabetes treatment due to unresolved questions about changes in liver fat that cropped up during late-stage testing of the drug.

The Indianapolis drugmaker said it will take a $55 million, pre-tax charge in the fourth quarter for the decision.

Lilly shares climbed $2.71, or 3.3 percent, to $85.71 in morning trading Friday along with a broader market surge.

Lilly said Friday that it decided to stop developing the insulin peglispro after learning that it would take more time and cost more than expected to understand the liver fat changes. Lilly had said last year that it expected to seek regulatory approval for peglispro in 2015, but it then announced last February a delay of the insulin's regulatory submission in order to understand the effects of that issue.

Analysts had predicted the drug, if approved, could bring in as much as $2 billion in annual revenue by 2023.

Lilly Diabetes President Enrique Conterno said in a written statement that the company was encouraged by peglispro's effectiveness but "moving forward would have required a significant amount of time and investment with no assurance that we would find conclusive answers."

Peglispro had been predicted to outperform blockbuster Lantus. In three clinical trials involving both Type 1 and Type 2 diabetics, it helped more patients than Lantus lower a key blood sugar measure known as hemoglobin A1C to the recommended level of less than 7 percent.

Peglispro is a basal or background insulin that patients take along with shorter-acting mealtime insulin to help control diabetes, a chronic condition in which the body either does not make enough insulin to break down the sugar in foods or uses insulin inefficiently. Lilly was studying it as a once daily, injectable treatment for type 1 and type 2 diabetes.

Lilly stock had climbed 20 percent so far this year, as of Thursday's market close.

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