Analysts and investors turned sour on Eli Lilly and Co.'s stock overnight after the Indianapolis drug maker stopped enrolling patients in two small safety trials of a potential blockbuster drug.
Lilly shares opened today at $52.15, down $3.74 or 6.6 percent from their close yesterday.
Lilly announced yesterday after markets closed that it had temporarily halted two clinical trials of prasugrel, an anti-blood clotting drug, to adjust dosing for some patients. Lilly is working with Japan-based Daiichi Sankyo Co. Ltd. to develop prasugrel, which drug analysts say could hit $2 billion in annual sales.
The action raised questions about whether prasugrel will prove to be superior to Plavix, something Lilly hopes to show Nov. 4 when it releases data from a massive, head-to-head clinical trial that compares the drugs. Plavix, made by Bristol-Myers Squibb Co. and Sanofi-Aventis SA, is the No. 4 bestselling drug in the world, racking up 2006 sales of $5.8 billion, according to IMS Health.
Morgan Stanley analyst Jami Rubin cut her rating today on Lilly shares to underweight from equal-weight. She also lowered her price target to $51 a share from $61, according to a report from Thomson Financial.
Lilly needs prasugrel to succeed in order to replace sales of its aging bestseller Zyprexa, which already faces generic competition in two countries and will lose patent protection in the United States in 2011. Zyprexa posted $4.4 billion in sales last year.
Earlier studies of prasugrel suggested it is more potent than Plavix. But safety has been a concern, analysts say, because if prasugrel is too powerful, it could cause excessive bleeding in patients. Doctors use blood thinners to prevent heart attacks and strokes.
In a statement, Lilly officials said its changes to the Phase II safety trials do not necessarily indicate the forthcoming results of any other prasugrel trials. But analysts aren't so sure.
"Bottom line, it's bad," Jon LeCroy, an analyst at Natixis Bleichroeder, told Bloomberg news. "It implies to investors the drug is not going to end up clean, with both great safety and great efficacy."