Lilly's stroke drug faces big moment

NEW YORK (CNNMoney.com) -- The moment of truth for Eli Lilly & Co. - and its experimental anti-stroke drug prasugrel - is at hand.

The drugmaker Lilly (Charts, Fortune 500) was scheduled to lift the curtain Sunday on its final-stage test results for prasugrel at the annual conference of the American Heart Association (AHA) in Orlando, Fla. In the drug's most advanced study, Lilly is testing the drug's ability to prevent the type of clotting that results in strokes and heart attacks.

The pressure is on Lilly - and the rest of Big Pharma - to produce profitable new drugs to ward off an industry-wide sales vacuum as the patents expire on blockbuster drugs. This results in plunging sales as generic drugmakers flood the markets with low-cost versions of the brand-name drugs.

Some $20 billion worth of drugs will go off patent in 2008, according to a recent report from IMS Health.

At the AHA, the focus will be on up-and-coming drugs for the $20 billion cholesterol sector - currently dominated by Lipitor from Pfizer Inc., (Charts, Fortune 500) the world's top-selling drug with nearly $13 billion in 2006 sales.

Prasugrel was once hailed by analysts as a potential multi-billion dollar blockbuster that would compete with Bristol-Myers Squibb's (Charts, Fortune 500) Plavix, an anti-clotting drug that totaled $3.4 billion in sales during the first nine months of this year.

But since Oct. 24, when Lilly said it suspended two earlier-stage prasugrel studies comparing the drug to Plavix, the stock has fallen 7 percent, and some analysts have backed away from their previously bullish sales projections.

Lilly said, in a press release, that the additional prasugrel studies were suspended because preliminary results had shown that a "dose adjustment" was required for some participants in the studies.

"There were no indicated problems or safety signals at all," said Lilly spokesman Joedy Isert. "There were no red flags. It was just an opportunity to take a look at dosing."

Isert said the suspended studies compare prasugrel and Plavix, and are completely separate from the more advanced study on prasugrel alone being announced Sunday.

"People should not infer from the suspension of these trials that there's any relation to the Triton (advanced) trial," said Isert. "They're not related at all."

But others aren't so sure.

"Quite clearly, if prasugrel is superior to Plavix, it will be a very significant drug that will sell billions of dollars a year," said Michael Krensavage, analyst for Raymond James & Assoc. "So everybody's waiting for the data on Sunday morning, and certainly it's the most anticipated data release at AHA. [But] I would think that the fact that Lilly did halt those two trials suggests that the drug will have some hair on it."

Lilly's Isert said the company will wait until after the test results are publicized before submitting the drug to the Food and Drug Administration. But even if the test results are strong and the drug is approved, it faces a tough competitive landscape, said Les Funtleyder, analyst for Miller Tabak.

"[Prasugrel] will be approved, but it won't be used much, and they're competing against Plavix, which is a well-entrenched compound, so its going to be tough for Lilly," projected Funtleyder. "There are few outcomes that would ensure a massively successful product."

In addition, when the Plavix patent expires in 2011, then prasugrel will have to compete against generic versions of that drug, said Krensavage of Raymond James.

That generic competition might even come sooner if Bristol fails in its legal battle with Apotex, a privately held Canadian company that temporarily flooded the U.S. market last year with generic versions of Plavix before being blocked by a court action. Apotex appealed the decision.

Barbara Ryan, analyst for Deutsche Bank North America, said she is backing away from her earlier prasugrel estimate - of nearly $1 billion in annual sales by 2010 - until she sees the test results Sunday.

"It's sort of irrelevant at this point until we see the data," said Ryan.

But analysts feel much better about Cordaptive, an experimental cholesterol drug from Merck & Co. (Charts, Fortune 500) The drug is designed to decrease harmful types of cholesterol, known as LDL and triglycerides, and increase HDL, a beneficial type of cholesterol.

At the AHA conference, the New Jersey-based drugmaker will release late-stage test results about Cordaptive, focusing on its safety profile.

Merck has already released strong late-stage data for Cordaptive, prompting Chris Schott, analyst for Bank of America, to project FDA approval in the second quarter of 2008, and $665 million in annual sales by 2011. Funtleyder of Miller Tabak, believes the drug could achieve billion-dollar blockbuster sales within four or five years.

Other AHA studies include reports from the drugmakers Abbott Laboratories (Charts, Fortune 500), Takeda Pharmaceutical Co. and Pfizer.

Illinois-based Abbott will report the final-stage study results of its experimental cholesterol drug Simcor. Simcor is a combination of Abbott's extended-release version of niacin, a form of vitamin B, and simvastatin, the generic version of Merck's Zocor, which lost patent protection in 2006.

The FDA is currently reviewing Simcor, which would be used to decrease harmful types of cholesterol while increasing the beneficial types. But analysts interviewed for this story said they're not interested in Simcor, implying that they don't think it will be a big seller.

"It really depends on how much marketing effort the company's going to put behind it," said Krensavage of Raymond James.

The Japanese drugmaker Takeda will report on the experimental cholesterol drug TAK-475, followed by additional late-stage study results at the American College Cardiology conference in March. Schott of Bank of America expects a 2009 launch for TAK-475, and said it would compete with Vytorin, a fast-growing cholesterol drug blockbuster from Merck and Schering-Plough (Charts, Fortune 500).

Also, Pfizer will release study results on its doomed drug torcetrapib, which was originally intended as an add-on to Lipitor. The New York-based drug giant discontinued late-stage studies of torcetrapib in 2006 after studies revealed a high death rate and heart problems among patients.

While the results won't affect Pfizer, which already suffered through a 8 percent stock drop in December, they will "shape the decisions" of companies preparing similar cholesterol drugs, said Krensavage.