- The Washington Times - Monday, April 20, 2009

INDIANAPOLIS (AP) - Drugmaker Eli Lilly and Co. saw its first-quarter profit soar on strong sales but then watched its stock price dip Monday on a rough day for the broader market.

The quarterly performance _ which included a 23 percent profit increase _ impressed analysts, but they noted that longer-term questions remain unanswered for Lilly.

Despite the strong start to 2009, Lilly only reaffirmed _ and did not raise _ its guidance for full-year earnings between $4 and $4.25 per share. Analysts forecast $4.14 per share.

“There’s not going to be follow-through for the rest of the year, so I think that’s a little disappointing from … a near-term perspective,” Edward Jones analyst Linda Bannister said.

Miller Tabak and Co. analyst Les Funtleyder said the company’s core business is doing well, but he would like to see new product approvals or learn more about drugs in Lilly’s development pipeline before he recommends investors “jump in with both feet” to buy the stock.

The drugmaker will lose patent protection for its best-seller, the antipsychotic Zyprexa, in 2011. Patents for its next three highest-selling drugs _ Cymbalta, Humalog and Gemzar _ are set to expire in 2013.

“From a 2009 point of view, things look OK,” Funtleyder said, adding that the market will “continue to assume the worst with respect to what happens post-Zyprexa until it’s clear it’s not the worst case.”

Company officials touted the drugs moving through Lilly’s pipeline during a Monday conference call with analysts. One of those drugs, the blood thinner prasugrel, recently was launched in the United Kingdom and Germany under the name Efient. But it still awaits U.S. approval.

Steven Paul, Lilly’s executive vice president of science and technology, said the company is aiming for two launches per year of “high-value medicines” by 2013.

Lilly reported a first-quarter profit of $1.31 billion, or $1.20 per share, compared with profit of $1.06 billion, or 97 cents per share, during the same period a year earlier. Revenue rose 5 percent to $5.05 billion.

Analysts polled by Thomson Reuters expected profit of 99 cents per share on revenue of $5.05 billion.

Sales of the antidepressant Cymbalta, Lilly’s second-best seller, grew 17 percent to $709 million, and the insulin Humalog saw revenue rise 11 percent to $450.6 million.

However, Lilly’s top seller, the anti-psychotic Zyprexa, had flat sales of $1.12 billion.

Meanwhile, San Diego-based Amylin Pharmaceuticals Inc. said Monday activist investor Carl Icahn plans to push for a sale of the company to Lilly if he can take control of Amylin’s board of directors.

Lilly and Amylin are partners on the twice-daily injectable diabetes treatment Byetta and a developing once-weekly version of the same drug called exenatide LAR. Last fall, Icahn brokered the sale of ImClone Systems Inc. to Lilly for more than $6 billion.

Lilly spokesman Mark Taylor declined to comment on Icahn’s plans. But he said his company would consider small- to midcap acquisitions similar to its purchase of ImClone, which Lilly bought for more than $6 billion last year, or ICOS Corp., a deal the drugmaker completed in 2007 for $2.3 billion.

Lilly Chairman and Chief Executive John Lechleiter said Monday during the company’s annual shareholder meeting the drugmaker doesn’t need to combine with another large drug company.

“Indeed, we believe that large-scale mergers have seldom created long-term shareholder value and instead have diverted resources and attention from the only work that counts, discovering and developing innovative medicines and bringing them to patients,” he said.


AP Business Writer Damian J. Troise in New York contributed to this report.

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