The CEOs at Eli Lilly and Bristol-Myers Squibb took completely different paths in how they would bet on their company's future and within 12 hours each had to acknowledge that their bets didn't pay off.
After months of criticism about its late-stage effort to determine the efficacy of the last big Phase III hope for Alzheimer's, Eli Lilly ($LLY) today acknowledged that solanezumab flunked both primary endpoints while slowing decline in some patients. The news puts into question CEO John Lechleiter's unwavering faith in the company's R&D division, and perhaps his future there. While others have gone the mergers and acquisitions route, buying promising drugs, Lechleiter insisted that Lilly's scientists would develop the drugs that Lilly needed to grow, even as generics began eating away at profit from blockbusters.
Lilly just last month reported that sales fell 10%, to $5.6 billion, which was less than the 18% decline in revenue Bristol-Myers Squibb ($BMY) reported, but still not what investors wanted to hear.
And what does the BMS announcement today say about BMS CEO Lamberto Andreotti and the M&A approach? BMS acknowledged that it would write off its effort to develop a new hepatitis C drug less than 8 months after paying out $2.5 billion for Inhibitex to get its hands on the drug. It stopped its study after one of the participants died from heart failure and 8 others were hospitalized.
"The Inhibitex acquisition shows the dangers of paying huge premiums for late-stage drug candidates in hot areas. They still can fail," University of Michigan professor Erik Gordon tells Bloomberg.
- here's the Eli Lilly press release
- see the Bloomberg story
- get more from Bloomberg
Lilly's Alzheimer's drug solanezumab flunks out, but CEO sees promise
Is Lilly betting the farm on its high-stakes Alzheimer's gamble?
Deadly tox threat kills Bristol-Myers' once-brilliant $2.5B hep C prospect
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