Shares of Eli Lilly and partner Incyte drop after the U.S. Food and Drug Administration declines to approve a new drug for rheumatoid arthritis. Roselle Chen reports.
Shares of Eli Lilly dropped on Monday morning after the U.S. Food and Drug Administration declined to approve its new medicine for rheumatoid arthritis, Olumiant. Shares of Eli's partner - Incyte - plunged. The FDA said it needs to see more clinical trials to better determine doses of the drug and safety of treatment. Don Steinbrugge of Agecroft Partners: (SOUNDBITE) DONALD A. STEINBRUGGE, CFA, AGECROFT PARTNERS, (ENGLISH) SAYING: "I think it's, obviously, very unfortunate for both, Incyte and Eli Lilly, that this arthritis drug has been pushed back. Right now, if they have to go back to clinical trials, you're talking potentially three years delay in getting this drug to market, and this drug is expected to generate over a billion dollars in revenue. So, you know, a three-year delay is a major hit on the stock price of both companies. And, you know, with drugs, you know, it's a combination of profitability, but it's also market sentiment. It's very difficult to predict what the profitability of a drug company will be in five years out, and when you have a delay like this, it really does impact the market sentiment of those companies." Analysts expected Olumiant to generate $1.7 billion in annual sales by 2023 according to Thomson Reuters data. The news of a delay in production of the drug sent shares of competitors - AbbVie and Pfizer - higher. Both companies already have rheumatoid arthritis drugs on the market.