Eli Lilly ends drug development, sending stock plummeting

Pharmaceutical giant Eli Lilly's stock tumbled 8% Monday after the company said it will discontinue development of a key cholesterol drug.

Lilly said it has ended late-stage development of evacetrapib, which was part of a costly study involving 12,095 patients at 540 sites in 37 countries. The therapy was in Phase 3 development — the final stage before a drug can be submitted to the Food and Drug Administration for approval.

The failure to bring the drug to the market reflects a significant setback for Lilly, which saw shares fall more than 10% to $77 in pre-market trading before regaining some ground.

An independent data monitoring committee "suggested there was a low probability the study would achieve its primary endpoint based on results to date," Lilly said in a statement.

The drug, which was supposed to treat people at a high-risk of atherosclerotic cardiovascular disease, displayed "insufficient efficacy" the company said.

The company emphasized that the study was not halted because of safety problems.

"We're obviously disappointed in this outcome, as we hoped that evacetrapib would offer an advance in treatment for people with high-risk cardiovascular disease. We'll be working with investigators to appropriately conclude these trials," David Ricks, Lilly senior vice president and president of Lilly Bio-Medicines said in the company statement. "We remain confident in our pipeline as we prepare for launches in other therapeutic areas with significant unmet needs."

The company expects to take a $90 million pre-tax charge to account for the drug's discontinuation.

Just days before Lilly discontinued the drug, Credit Suisse analyst Vamil Divan told investors that he was "cautiously optimistic" about the drug, saying that "much of the investor focus" was on evacetrapib and another therapy. Citing the company's diverse portfolio, Divan had upgraded his target price on Credit Suisse shares from $89 to $105.

But after Monday's news, Divan lowered his target to $99. He said that Lilly is still well-positioned with a diverse lineup of drug candidates despite the setback.

“They have a number of attractive products in their late-stage portfolio,” Divan said in an interview. “I don’t think it fundamentally changes the company or their overall story.”

In the past, pharmaceutical companies have shed jobs and cut other costs in the wake of a major disappointment in the lab. Divan said he’s not expecting big cuts at Lilly, although he noted that the industry is always seeking to make its operations more efficient.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.