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Next big test for biotech investors is FDA review on Lilly arthritis drug

April 19, 2018

Biopharma investors face another test next week as a highly anticipated U.S. Food and Drug Administration advisory panel is set to spark moves in shares of Indianapolis-based Eli Lilly and Co., Incyte Corp. and other companies developing medicines for rheumatoid arthritis. Briefing documents released Thursday by the Food and Drug Administration do not appear to be positive for the drug.

Analysts are cautious after the FDA last year rejected Lilly and Incyte’s baricitinib and asked for more data about potential safety concerns and optimal dosing. Credit Suisse estimates that a positive recommendation for both doses of baricitinib at Monday’s meeting could boost Lilly shares by 3 percent to 5 percent and lift Incyte by 10 percent to 15 percent.

The worst-case scenario—if neither dose wins panel backing—might send Lilly lower by 5 percent and Incyte by 13 percent, according to the bank.

Analysts say baricitinib could reach $1.5 billion in sales by 2024 if approved by the FDA. However, the briefing documents released Thursday by the FDA said agency reviewers are still concerned about serious risks for deadly blood clots at higher doses.

Lilly shares dropped almost 2 percent in premarket trading and were down 1.1 percent, to $78.87 each, in the early afternoon.

The stakes are high for other drugmakers, too. AbbVie Inc. has a similar drug in development and could benefit from positive commentary by the panel of advisers. Credit Suisse sees AbbVie shares rising 1 percent if baricitinib is endorsed and falling 3 percent if it isn’t. Gilead Sciences Inc. and Galapagos NV may also reflect read-through to their experimental filgotinib treatment, with upside for Galapagos shares of 5 percent and downside risk of 10 percent, Credit Suisse estimates.

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