Lilly's 2016 outlook dogged by exchange rates, buoyed by pipeline
- Indianapolis-based pharma giant Eli Lilly on Tuesday offered a relatively bleak financial outlook for 2016, with a projected adjusted EPS range of $3.45 to $3.55 per share versus analyst estimates of $3.65 per share.
- The firm points to an unfavorable foreign exchange rate landscape as one of the major reasons for the bearish projection, as well as lower sales estimates from the chemotherapy treatment Alimta and the firm's animal health business.
- However, Lilly shares remained relatively flat (and even spiked a bit in Tuesday afternoon trading) as the prospect of more study results from late-stage drug candidates buoyed investor confidence in the company's future. CEO John Lechleiter also said that the company would not be pursuing an inversion merger in the pursuit of tax relief during an investor call.
Several of the most promising in-development treatments cited by the firm and investors include the Alzheimer's therapy solanezumab, a migraine drug, and the breast cancer therapy abemaciclib. Lilly said that more data on solanezumab, which has shown mixed results so far, will be released in both 2016 and 2017.
Unfortunately for the firm, Lilly is also contending with the loss of one of its star pipeline candidates, the CVD drug evacetrapib. Evacetrapib was designed to boost "good" HDL cholesterol levels in an effort to ward off heart attacks and stroke, but was found to be ineffective. The massive (and expensive) phase 3 trials testing the drug were consequently wound down by the company in October.
But Lilly has been expanding its R&D footprint in the hopes of uncovering a game-changing therapy in other therapeutic spaces. In fact, the firm projects R&D spending of $4.8 billion to $5 billion this year—a $200 million baseline boost compared to 2015.