Analysts swoon again on solanezumab hopes

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Despite the August 24 announcement that Lilly's experimental Alzheimer's drug solanezumab had failed to meet its Phase III targets, some analysts are staying positive about the therapy.

The enthusiasm is taking on two distinct flavors, the first being the possibility that there is life in the drug yet. Bernstein analyst Tim Anderson wrote September 5 that even if the company dials back its patient audience to include mild or pre-Alzheimer's patients, approval of a low-efficacy drug could have sales of $7.5 billion in 2020, or $12,500 for a year's worth of prescriptions.

The other angle is the pure research benefit. Lilly is expected to release the full findings of its Expedition study at two conferences next month, and both Barclay's analyst Tony Butler and the Alzheimer's Association have written that Lilly's trials will show whether attacking beta-amyloid is the right way to combat the degenerative disease.

In other words: failures or adjusted expectations will determine the best places to funnel money, in terms of  investments and/or research.

On the cautionary side, analysts noted even before Lilly announced the drug's unimpressive Phase III results that they hadn't built success into company assessments.

The addition would be a critical one to Lilly's neuroscience unit, which is the major earner in a treatment portfolio that consists of the relatively weaker endocrinology, oncology, cardiovascular and animal health divisions. It's also the category that is loaded with significant patent issues. Antidepressant Zyprexa, which accounted for 19% of total 2011 revenues, went generic in October 2011. Cymbalta, another antidepressant, pulled in 17% of company revenues last year, and is slated to go generic next year.

In terms of Lilly's fate, Anderson noted the company has some breathing room. The analyst wrote that the company's Phase III pipeline consists of drugs that could keep money flowing in at a comfortable rate, including the experimental psoriasis medication ixekizumab, novel basal insulin LY2065541 and a biosimilar for Lantus, LY2963016, among others. He described these treatments as having medium commercial potential but a high probability of technical success.
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