Anyone who had expected clear-cut guidance from a major, federally financed study on big-selling schizophrenia drugs will be sorely disappointed.

That's because the study raises more questions than answers, according to Alexandra Hauber, an analyst at Bear Stearns.

The Clinical Antipsychotic Trials of Intervention Effectiveness, or CATIE, recently examined four Big Pharma drugs and one generic drug. Doctors were hoping to gain insight in to the drugs' effectiveness and side effects. Analysts were looking to determine when and if these drugs could help their developers' stock prices.

Instead, they got a mixture of uncertainty and conflicting information for several $1-billion-plus drugs from companies such as Eli Lilly ( LLY) and AstraZeneca ( AZN).

"We're not expecting any revenue impact in the third quarter or the fourth quarter," says Albert L. Rauch of A.G. Edwards, referring to the study sponsored by the National Institute of Mental Health. If the CATIE study prompts any changes in product sales, it will be next year, he says.

The biggest surprise, on a cost-benefit basis, was that the 40-year-old generic drug perphenazine was as good as the more expensive brand-name drugs.

Relatively few patients stayed with the same drug during the 18 months of study, highlighting the challenge to doctors. "How clinicians, patients, families and policymakers evaluate the trade-offs between efficacy and side effects will determine future patterns of use," say authors of the study, which was published recently in The New England Journal of Medicine.

Such comments prompted Hauber to worry that CATIE might lead to a slowdown in sales of newer drugs, known as atypical antipsychotics. Generic perphenazine cost about one-tenth the price of a brand-name drug.

Even though Rauch says there weren't "real clear definitions of what works best," he doubts doctors will revert to older drugs, preferring instead the atypical antipsychotics. Generic companies lack the money or incentive to run updated clinical trials on old drugs, leaving the freshest research to newer drugs.

Rauch adds that doctors tend to keep someone on a certain drug as long as the patient is stabilized and doesn't suffer from severe side effects. Thus, it will take time for physicians to change their practice patterns. The earliest indicator for investors will be changes in new prescriptions. If a clear pattern emerges, then investors can look to changes in revenue.

According to the National Alliance on Mental Illness, a nonprofit advocacy group, about 2.2 million American adults have schizophrenia.

Looking for Winners

Prominent players in this drama include Lilly's Zyprexa, the long-time revenue leader, AstraZeneca's Seroquel, which surged in to the U.S. prescription lead this year, and Johnson & Johnson's ( JNJ) Risperdal, which runs a close second to Seroquel.

Pfizer's ( PFE) Geodon has settled in fifth place with a flattening U.S. prescription growth rate.

The other big player is Bristol-Myers Squibb ( BMY), whose fourth-place Abilify is the fastest-growing drug in the class. Abilify wasn't included in CATIE.

Rauch says CATIE could help stabilize U.S. prescriptions for Zyprexa, which produced $2.1 billion in worldwide sales for the first six months of 2005. Zyprexa is Lilly's biggest drug, accounting for 30% of sales. From the beginning of 2004 through late September 2005, Zyprexa's total U.S. prescriptions and new prescriptions have fallen sharply, says the medical data tracking firm IMS Health.

Zyprexa now trails Seroquel and Risperdal by healthy margins. Zyprexa's U.S. prescription market share has declined thanks to competition from drugs that have fewer side effects, and data from CATIE confirmed the doctors' dilemma when prescribing Zyprexa.

CATIE tested a drug's efficacy by assessing how many patients continued treatment for the full 18 months of the study. Zyprexa had a 64% drop-out rate, and Seroquel's quit rate was 82%. Other drugs had quit rates of 74% to 79%. Patients stayed on Zyprexa for an average of 9.2 months. The closest contender was generic perphenazine at 5.6 months, and the worst was Geodon at 3.5 months.

But Zyprexa patients had greater weight gains, increases in blood sugar levels and other side effects vs. people taking competing medications. Patients lost weight with perphenazine and Geodon.

Competition Continues

The CATIE study probably won't help AstraZeneca's Seroquel at the expense of Zyprexa, Hauber says. CATIE may strengthen Lilly's marketing message, but Zyprexa's side effects should enable Seroquel to maintain market leadership, she says.

Seroquel produced first-half worldwide sales of $1.3 billion, or 11% of corporate revenue. Seroquel is AstraZeneca's second-biggest product.

Mark Purcell of Deutsche Bank recently told clients he doubts Seroquel will lose its top ranking even though Seroquel patients had the highest drop-out rate in CATIE. Purcell predicts Seroquel could double its U.S sales to $3 billion and nearly triple its foreign sales to $1.4 billion between 2004 and 2008.

CATIE seemed to cause less Wall Street stirring for Risperdal, which is J&J's biggest drug, collecting first-half revenue of $1.74 billion. CATIE will probably have little effect on Geodon, which recorded $282 million in first-half sales.

The big mystery remains for Abilify, which has become Bristol-Myers Squibb's fifth-best selling drug, producing $428 million in sales during the first half of the year. That's 4.5% of corporate sales, and Abilify's percentage is bound to grow as the company continues to lose patent protection on bigger products. When you measure new U.S. prescriptions, Abilify has nearly caught Zyprexa.

Bristol-Myers is the development and marketing partner of the drug's creator, Japan's Otsuka Pharmaceutical Co.

Analysts aren't quite sure how Abilify will continue to fare against its peers, even though the drug has had a favorable side-effect profile. Richard Evans of Sanford Bernstein recently told clients he was reducing his rating on Bristol-Myers for several reasons, such as existing products, the R&D pipeline and government investigations.

Still, he predicts a doubling of worldwide Abilify sales to $1.9 billion in 2009 from an estimated $989 million this year.

Richard Evans of Sanford Bernstein has a market perform rating on Bristol-Myers Squibb. He doesn't own shares, and his firm has a non-investment banking relationship.

Mark Purcell of Deutsche Bank has a buy rating on AstraZeneca. He doesn't own shares, but his firm expects to seek or to receive investment-banking compensation in the next three months.

Alexandra Hauber of Bear Stearns has an outperform rating on AstraZeneca. She doesn't own shares, and her firm has had a non-investment banking relationship with the company. Her firm has a peer perform rating on Eli Lilly.

Albert Rauch of A.G. Edwards has a buy rating on Eli Lilly and a hold rating on Bristol-Myers Squibb. He doesn't own shares. His company has had a non-investment banking relationship with Bristol-Myers.

More from Stocks

Micron Shares Soar; Chipmaker Is 'Managing for Profitability' Now, Says Analyst

Micron Shares Soar; Chipmaker Is 'Managing for Profitability' Now, Says Analyst

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline

Facebook CEO Mark Zuckerberg Deflects Tough Questions From European Parliament

Facebook CEO Mark Zuckerberg Deflects Tough Questions From European Parliament

What Does China's Tariff Deal Mean for Automakers Like Tesla?

What Does China's Tariff Deal Mean for Automakers Like Tesla?

Lowe's Taps Home Depot Veteran As New CEO

Lowe's Taps Home Depot Veteran As New CEO