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Lilly drugs may be delayed
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December 19, 2001: 11:48 a.m. ET
Quality control at plants needs improvement for FDA approval of two drugs.
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NEW YORK (CNN/Money) - Drugmaker Eli Lilly and Co. said Wednesday the U.S. Food and Drug administration has identified quality control issues at certain plants which could delay the approval of two new drugs.
But Lilly also reaffirmed its earnings guidance for 2002 and said three promising drugs, including a successor to blockbuster depression treatment Prozac, are on track for release next year.
Shares of Lilly (LLY: down $1.44 to $81.20, Research, Estimates) dropped more than 2 percent in morning trading on the New York Stock Exchange.
The company said the U.S. Food and Drug Administration outlined 50 quality-control concerns at Lilly's facilities in Indianapolis relating to computer system validation, manufacturing process reviews and data handling.
Lilly said FDA approvals of osteoporosis treatment Forteo and an injectable version of psychosis and schizophrenia drug Zyprexa are conditional on the resolution of the manufacturing issues and the launch dates for the drugs are now "uncertain."
"I am committing all the necessary resources of the company to address these issues," said Sidney Taurel, Lilly chairman, president and CEO, in a statement. "We will continue to work closely with the FDA in order to deliver on our promise to bring these innovative new medicines to patients as quickly as possible."
Lilly spokesman Ed West said the company has been working to resolve FDA quality-control concerns regarding Zyprexa IntraMuscular and Forteo since March.
West said in March the company received a warning letter from the FDA containing 61 quality-control observations regarding injectable Zyprexa, then in April a pre-approval inspection relating to Forteo resulted in more FDA concerns.
He added that labeling issues with Forteo also must be addressed before the FDA grants its approval.
"We have a lot of work we need to do and we intend to do that," West said.
Jeffrey Kraws, drug analyst with Gruntal and Co., said he has confidence in a large company like Lilly sorting out what are essentially "blocking and tackling" issues.
"This is a major pharmaceutical company and it's unlikely that a major pharmaceutical company can't resolve [quality-control observations]," Kraws said.
"If this was a new plant opening, and there were tons of issues, then I would be concerned," he said. "But data handling, that's an administrative task."
Three drugs still on target for 2002
Lilly said the delay in the drugs won't affect 2002 earnings, and it gave investors and analysts the first guidance for a release date on the drug it hopes will replace Prozac.
Lilly said depression treatment duloxetine looks "very promising" and was recently submitted to the FDA for approval. The company expects to launch the drug in the second half of 2002.
Also on the cards for the second half of next year are Cialis, which will compete with anti-impotence drug Viagra, and attention deficit disorder treatment atomoxetine, which is expected to compete with Ritalin.
The company said it expects to earn $2.70 to $2.80 per share in 2002, and it sees earnings-per-share growth in the high teens in 2003. Analysts surveyed by First Call are expecting earnings of $2.73 per share in 2002 and $3.22 per share in 2003. 
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