(Reuters) – Eli Lilly and Co said on Friday its cancer treatment Lartruvo, approved on an accelerated basis in 2016, failed to improve patient survival in a long-term study and will no longer be prescribed, driving shares down nearly 3 percent.
Lartruvo was granted accelerated approval for the treatment of adult patients with soft tissue sarcoma based on mid-stage trial data by the U.S. Food and Drug Administration and a conditional approval by the European Medicines Agency in 2016, with continued approval remaining contingent on the results of a late-stage trial.
On Friday, Lilly said the study did not confirm the clinical benefit of Lartruvo, used in combination with the standard-of-care chemotherapy doxorubicin, when compared to doxorubicin alone, calling the trial results surprising and disappointing.
“Given Lilly’s strategic focus on oncology, this increases the probability that Lilly will make more oncology acquisitions to improve scale,” BMO Capital Markets analyst Alex Arfaei said in a client note.
Last week, Lilly said it would buy Loxo Oncology Inc for $8 billion, an expensive bet on a pipeline of cancer drugs that target rare genetic mutations in its biggest acquisition in the drugmaker’s 143-year history.
Lilly has typically stayed away from large deals, preferring to develop its own drugs. But last year it paid $1.6 billion for Armo Biosciences, a developer of immunotherapy cancer drugs, and said in November it was open to more deals.
The company said it was working with global regulators to determine the appropriate next steps for the treatment.
While these discussions are ongoing, patients currently receiving Lartruvo may continue their course, if they are receiving clinical benefit, the company said.
For patients who have not previously received Lartruvo, the trial results do not support initiating the treatment. The company said it is suspending promotion of the drug.
It was probable that Lilly will eventually pull Lartruvo from the market, Arfaei said, noting the data was clearly surprising given prior data.
Lartruvo was expected to bring in $374.50 million in 2019, according to IBES data from Refinitiv.
The company said it expects to take a first-quarter charge, related to Lartruvo, in the range of $70 million to $90 million pre-tax, or about 10 cents per share after tax.
Lilly also said it expects the trial failure to have an impact of about 17 cents per share on its full-year 2019 earnings forecast, but does not see a change in its 2020 minimum financial goals.
Lilly shares fell 2.7 percent at $115.94 in late morning trading.
Reporting by Saumya Sibi Joseph and Ankur Banerjee in Bengaluru; Editing by Shailesh Kuber and Shinjini Ganguli