Lilly Lowers Guidance on Weak Prozac Sales, Cialis Delay

The company said its 2002 and 2003 results would fall short of its previous outlook.

Author:: Michael Dunn
Publish date:: Apr 30, 2002 10:20 AM EDT

Updated from 7:45 a.m. EDT

Eli Lilly

said it was lowering its 2002 and 2003 full-year guidance,reflecting falling Prozac sales and a delayed launch date for Cialis, animpotence treatment for which it and a partner recently received an FDAapprovable letter.

Lilly and its partner

Icos

(ICOS)

said Tuesday they received conditional approval for Cialis from the Food and Drug Administration, but that the drug is not expected to launch until 2003. Two weeks ago, the companies insisted that Cialis would launch in the second half of this year. Lilly said final approval for Cialis still requires additional tests, labeling discussions and inspection of the company's manufacturing plants.

The drugmaker reaffirmed its earnings per share guidance for thesecond quarter, saying it still expects 61 cents to 63 cents, in line withthe Thomson Financial/First Call consensus estimate. But for the full year,Lilly lowered its forecast to EPS of $2.60 to $2.65. That's down from thecompany's

original guidance of $2.70 to$2.80 a share and below analysts' lowered estimates of $2.68.

In recent trading, Lilly was down $3.35, or 4.9%, to $64.95, while shares of the much smaller biotech firm Icos plummeted $12.82, or 33%, to $26.18.

Lilly also blamed the lowered outlook on disappointing sales ofProzac, which should offset strong growth of some of the company's newerdrugs. Gross margins as a percentage of sales are also expected to fall atleast 1%, while marketing and administrative expenses will be higher. The company's new attention deficit hyperactivity disorder drug, atmoxetine is also suffering from a delayed launch, while sales of its sepsis drug, Xigris, continue to disappoint.

For 2003, the company expects to see earnings per share percentage growth in the teens. The consensus estimate of growth for Lilly is 46 cents per share over 2002.

The company's new guidance is also dependent on resolutions to the FDA'songoing manufacturing inspections and timely launches of several key drugsin Lilly's pipeline.