Evidence that the anxiety treatment Cymalta isn't selling as well as hoped led Merrill Lynch to downgrade shares of Eli Lilly ( LLY) to neutral from buy Tuesday. The brokerage, which has no banking relationship with Lilly, lowered its estimate of the drugmaker's 2006 earnings by a penny to $3.14 a share, which is slightly above the Thomson First Call consensus. Merrill shifted some of its projected earnings out of Lilly's first half and moved most of them into the second half. "Despite the start of a new promotional campaign in January, Cymbalta NRx share has only increased 30 basis points over the past three months (from 5.8% in late 2006 to 6.1% in the week ended March 17, 2006)," Merrill wrote. "And we anticipate a new competitor ( Wyeth's ( WYE) DVS-233) could enter the market in late 2006. Regarding Zyprexa, growth is slowing ex-U.S. as the product matures, and Abilify (a key competitor) may be approved in Japan in April." Merrill noted that its estimate for Lilly's annual growth for 2006 to 2009 is 8%, compared with the consensus of 10%. It cited doubts that the company's candidate for diabetic retinopathy, Arxxant, will be approved this August by the FDA. At its current price, Merrill said, Lilly trades at 17.3 times its 2007 earnings estimate of $3.39 a share, compared with an average industry multiple of about 15.3. "Although we believe Lilly's profile justifies a premium to the group, we do not anticipate much multiple expansion unless there is surprising good news or the market has a big upside move." Lilly fell $1.28, or 2.2%, to $57.39 Tuesday morning.