Doomed cholesterol drug causes Eli Lilly's worst day since 2008

Eli Lilly heart drug

Eli Lilly just suffered its darkest day since the 2008 financial crisis.

The drug maker's shares plunged 8% on Monday after it scrapped a potential blockbuster experimental cholesterol drug.

Eli Lilly (LLY) said the drug, known as evacetrapib, is being abandoned because research showed the medicine has failed to treat high-risk heart disease. Late-stage drug trials in about 12,000 patients showed "insufficient efficacy," Lilly said.

"We're obviously disappointed in this outcome, as we hoped that evacetrapib would offer an advance in treatment for people with high-risk cardiovascular disease," David Ricks, president of Lilly Bio-Medicines, said in a statement.

Related: Drug that skyrocketed 5,000% hasn't come down in price

$6 billion in Lilly market cap vanishes

It's a big setback and has spooked investors.

The stock selloff wiped out roughly $6 billion from Lilly's market value. The stock suffered its worst one-day percentage decline since December 2008.

Related: U.S. stocks: The punches keep coming

Previous research raised hopes on Wall Street and in the medical community that evacetrapib could be a big success in preventing heart attacks, strokes and other cardiovascular problems.

A study presented at the American Heart Association's annual meeting in late 2011 showed the treatment -- part of a class of drugs known as CETP inhibitors -- was able to enhance good cholesterol levels and diminish the bad kind.

Eli Lilly stock drop

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Lilly still confident in pipeline

Now Lilly is nixing the cholesterol drug and taking a $90 million pre-tax fourth-charter charge because it hasn't been very effective. The company said the decision to suspend the program is not related to safety problems.

Lilly sought to reassure Wall Street about its future, saying it remains confident in the company's "strong pipeline" of drugs in development. Despite the stock plunge, Lilly shares are up 24% over the past year.

Rival drug maker Merck (MRK) is working on its own CEPT cholesterol drug known as anacetrapib that is currently also in late-stage testing.

The Lilly drug failure is good news for Regeneron Pharmaceuticals (REGN), which received FDA approval in late July for a cholesterol-lowering treatment it developed with Sanofi called Praluent.

Regeneron stock jumped 4% on Monday, making it the best performer on the S&P 500.

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