Eli Lilly slashes 485 jobs, with ax falling heavily on faltering Alzheimer’s unit

Eli Lilly is laying off 485 employees in the wake of the failure of an Alzheimer's treatment.

Eli Lilly was so optimistic about its experimental Alzheimer’s treatment, solanezumab, the company staffed up in anticipation of its approval—a move that has proven to be a big mistake.

Indianapolis-based Lilly is now laying off 485 people, mostly in its faltering Alzheimer’s unit, the company told its city’s mayor and the Indiana State Department of Workforce Development in a letter sent under the federal Worker Adjustment and Retraining Act (WARN). The action is a direct result of its late November announcement that patients with mild to moderate Alzheimer’s disease who took solanezumab as part of its EXPEDITION3 trial showed no significant improvements in symptoms compared to placebo.

The company said back then that the failure would force it to reevaluate staffing, and in December, it warned sales reps in its U.S. Bio-Medicines group to be prepared for cutbacks in the first quarter of this year, a spokesman told Fierce at the time. According to the letter to the state, all of the affected employees will have until March 31 to apply for other positions in the company. None are union employees, the company added.

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It’s not just the Alzheimer’s unit that’s facing the chopping block, however. Lilly spokesman Edward Sagebiel told the Indianapolis Star in an e-mail that some longtime employees of the company’s animal health division, Elanco, were also offered voluntary exit packages as part of a restructuring. Sagebiel denied to provide further details about that plan when queried by Fierce.

The solanezumab disappointment comes at a time when Lilly is facing generic competition on several high-profile drugs, including erectile dysfunction medicine Cialis, ADHD drug Strattera and cardiovascular treatment Effient. Solanezumab was meant to be a billion-dollar replacement for those aging hits. Without it, Lilly is counting on other fresh market entries to pick up the slack, including diabetes drug Jardiance and Basaglar, its new biosimilar version of Sanofi’s insulin blockbuster Lantus.

Investors will also be watching some key late-stage pipeline hopefuls from Lilly, including baricitinib, a JAK1/2 inhibiting pill to treat rheumatoid arthritis. Lilly submitted the drug to the FDA for approval a year ago, and last June, the company showed in a long-term trial that the drug prevents joint damage. But on Jan. 13, the FDA said it needed three more months to review the additional data.

As for Elanco, it turned in less-than-stellar performance in the third quarter of last year, reviving questions about whether Lilly might spin off what has long been a leading player in animal health. During the quarter, Lilly’s animal health revenues fell 9% year-over-year to $706.2 million, which the company blamed on irregular wholesale buying patterns in companion animal health and an overall drop in demand on the food-animal side of the business.

Under now-retired CEO John Lechleiter, Lilly continued to build up its animal health business, buying Boehringer Ingelheim’s pet vaccines last fall in an $885 million deal. Lechleiter told Bloomberg TV at the time that animal health was an important source of diversification for Lilly and a source of “tremendous synergies” with the human side of the business. Whether new CEO David Ricks shares that sentiment, however, is not yet clear.

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