Eli Lilly Raises Guidance

The company expects to make $3.30 to $3.40 a share for the year.
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Updated from 7:37 a.m. EDT

Sparked by first-quarter results that beat Wall Street estimates

Eli Lilly

(LLY) - Get Report

said Monday it was raising its full-year earnings and sales predictions.

"We have started the year with very solid financial results, delivering double-digit sales growth and better-than-expected earnings per share for the first quarter," said Sidney Taurel, chairman and CEO, in a prepared statement.

By midmorning, shares were up 74 cents, or 1.3%, to $57.62.

The company said it expects to make $3.30 to $3.40 a share for the year, up from its previous guidance in the $3.25 to $3.35 range and in line with the $3.33-a-share Thomson First Call consensus estimate.

On a percentage basis, Lilly now expects full-year sales growth in the low double digits, up from its previous prediction of high single-digits to low double-digits.

Excluding certain items tied to licensing, acquisition and restructuring efforts, latest-quarter earnings were 84 cents a share. Sales rose 14% from a year ago to $4.23 billion. Analysts were looking for a 79-cent profit on sales of $4.12 billion.

After everything was factored in, the Indianapolis-based drug giant made $509 million, or 47 cents a share, for the quarter ended March 31, down from the year-ago $835 million, or 77 cents a share.

Reported earnings were affected by charges worth 29 cents a share for acquiring

Icos

, the maker of the impotence drug Cialis, and signing a deal with

OSI Pharmaceuticals

(OSIP)

to develop diabetes drugs. Restructuring activities led to charges of 8 cents a share.

Lilly's biggest product, Zyprexa, for treating schizophrenia, occupied the biggest share of the company's discussion with analysts following the earnings report. First-quarter Zyprexa sales totaled $1.11 billion, 10% higher than the year-ago quarter. U.S. sales rose 6% to $523.3 million as higher prices offset lower demand. Foreign sales climbed 14% to $584.7 million.

Executives repeated their prediction, made in January, that full-year Zyprexa sales would be stable in 2007, following a 4% gain last year.

The once-a-day pill now accounts for about 26% of Lilly's corporate revenue. John Lechleiter, the president and chief operating officer, reaffirmed that Lilly would seek approval from the Food and Drug Administration later this year for a once-a-month injectable version of Zyprexa.

Zyprexa has been pressured by competing drugs that don't cause as much weight gain. Zyprexa remains a target of lawsuits from patients who say Lilly didn't adequately notify them, or their doctors, of the drug's side effects.

In January, Lilly settled claims filed by more than 18,000 people, causing the company to take a fourth-quarter charge of $495 million. Two years ago, Lilly settled with some 8,000 patients, taking a charge of $1.07 billion. It subsequently settled with 2,500 more. Lilly says 1,300 Zyprexa lawsuits are pending, and Lechleiter repeated the company's position that it will fight them.

Among other products, first-quarter Cialis sales rose 19% to $265.8 million. The antidepressant Cymbalta grew by 89% to $441.8 million. Sales of the lung cancer drug Alimta jumped 44% to $187.8 million, while sales of Gemzar, for several types of cancer, gained 11% to $376.9 million.

The osteoporosis drugs Evista and Forteo gained 9% to $263.8 million and 21% to $153.4 million, respectively. The Humalog insulin business grew by 11% to $339.5 million. Strattera, for attention deficit hyperactivity disorder, fell by 8% to $139.9 million.