FDA Wants More Time to Review Eli Lilly's Sepsis Drug
Eli Lilly
(LLY) - Get Report
reaffirmed its second-quarter guidance this morning, but the drugmaker said that the
Food and Drug Administration
has extended the review timeline for the company's
Xigris
product.
Xigris is a treatment for sepsis, a syndrome that can lead to organ failure and death in response to an infection. Sepsis currently has no approved treatment.
Tim Anderson, an analyst at
Prudential Securities
said that the FDA delay "throws a bit more uncertainty into it. Any sort of pipeline setbacks, on a stock that is sort of expensive, causes concern." Anderson rates the stock a hold, with a $98 price target. Shares of Eli Lilly recently lost $2.72, or 3.1%, to $83.78.
This morning's announcement has "been somewhat reflected in the stock already," said Anthony Butler, a health care analyst at
Lehman Brothers
. Shares of Eli Lilly fell a bit more than 4% earlier in the day before regaining some ground.
Despite the FDA delay, "we're very bullish," said Butler. "We're not changing our estimates." Butler rates Lilly a buy, with a $90 price target.
In a press release issued before the opening bell, the company said "the FDA has assured Lilly that the application remains under priority review, and it will complete the application review process as soon as possible. Lilly is confident that this extension of the
biologics license application action date does not signify approvability concerns regarding the data in the application."
The company also reaffirmed its previous guidance this morning for second-quarter earnings of 73 cents to 75 cents a share and full-year earnings of $2.75 to $2.85 a share. The forecast includes the expectation that the company will lose its exclusive patent on the blockbuster antidepressant
Prozac
in the fall. Other companies will then be able to market generic forms of the drug, something that Butler believes may lead to some pressure on the stock.
While Butler said that "in six months, the stock will move higher," he believes that the stock may stay flat for some time, a sentiment echoed by Anderson. "All the drugs are moving sideways and not performing great," Anderson said. "Whether Lilly goes up a few points or down a few is not a big deal."
Lilly's stock is up 1.3% since April 27 and has been trading in a tight range throughout. The shares are down 7.1% in 2001.
Butler maintained his sales expectations for Xigris for the current year, despite the regulatory delay. His earlier estimates, he believes, were on the conservative side, and now those sales figures may come in closer to his target of $100 million for Xigris in 2001.