Loss of Cymbalta patent a major blow for Eli Lilly

Today it happens again at Eli Lilly and Co., with wrenching familiarity.

Another top-selling Lilly drug loses U.S. patent protection, opening the door to cheaper-priced generics that will immediately start grabbing prescription medicine share worth billions of dollars in annual sales.

This time the end of patented life is at hand for the antidepressant Cymbalta — and its imminent farewell as Lilly's top-selling drug is a downer indeed for the Indianapolis drug maker.

Losing Cymbalta opens a gaping hole in Lilly's product lineup.

Launched in 2004, Cymbalta accounted for 22 percent of Lilly's $22.6 billion in revenue last year. Within a year, if the usual scenario with generic competition unfolds, more than 70 percent of those $4.99 billion in sales will be gone, ceded to some of the 11 companies that have applied to the Food and Drug Administration to sell low-priced, copycat versions of the drug.

At Lilly's Indianapolis labs, where Cymbalta was invented in the mid-1980s, scientists say the drug's patent expiration will be marked this week with a few low-key get-togethers, their tone a mix of the funereal and the celebratory.

"In this industry, end-of-patent-life is a reality. It's part of the life cycle. We feel tremendously proud of what Cymbalta's been able to bring us," said Bill Ratner, senior director of marketing for the drug.

"It's been an incredibly gratifying experience to work on this drug," said Madelaine Wohlreich, who did so for 10 of her 12 years at Lilly, where she is a medical fellow in psychiatry and pain. "It's been a wonderful ride."

"It was a great drug. It's had an enormous impact on medicine," in part by offering pain sufferers a non-addictive alternative to opiate painkillers, said Dr. Steven Paul, a professor of neuroscience at Cornell University and a former executive vice president of science and technology at Lilly.

Cymbalta wasn't the path-breaking kind of drug that its predecessor Prozac was in the 1990s. And it didn't quite achieve the heights that the schizophrenia drug Zyprexa hit in the past decade, when it topped out with just more than $5 billion in sales in 2010.

READ MORE:David Wong played key role on Prozac, Cymbalta.

But Cymbalta became perhaps Lilly's most medically diverse best-seller, approved to treat both depression and pain and (in Europe) stress urinary incontinence. It works by affecting levels of two neurotransmitters in the body. The drug's been given to more than 60 million people and sales have grown every year it's been on the market, unlike most drugs that see a rise and fall.

That leaves Ratner wondering how much higher Lilly could have boosted Cymbalta's sales if its patent had a few more years to run. "The loss of opportunity to continue to see this brand grow" is one of his regrets, he says.

How Lilly will replace Cymbalta's lost billions is a critical question. Not that the challenge is anything new for Lilly.

The company struggled after losing Prozac's patent protection 2-1/2 years early, in 2001, due to a court challenge. To help cope, Lilly's then-president Sidney Taurel voluntarily reduced his salary to $1 a year.

Zyprexa was next, with its 2011 patent expiration; that's wiped billions from Lilly's revenue picture. Next year, another major seller, the osteoporosis treatment Evista, loses U.S. patent protection. Its $1 billion in sales amount to 4 percent of Lilly's revenue.

"Lilly faces one of the most severe patent cliffs across the pharmaceutical industry," said an investor report last month from BMI Americas Pharma and Healthcare Insights. "We see the company facing an uphill battle in the next few years, as it attempts to replenish its product pipeline."

Lilly has girded for its patent expirations by slashing more than $1 billion in costs in the past two years and cutting more than 1,000 jobs, including reducing the ranks of its sales representatives by 30 percent. It also slapped a salary freeze on most of its 40,000-person work force.

The company's also poured resources into its remaining products, trying to squeeze as much sales as it can get from the cancer compound Alimta, its generic-resistant bio-engineered insulins Humulin and Humalog, and a handful of other key products.

And Lilly has focused on hurrying as many new compounds as it can into its drug-development pipeline. It's brimming now with a dozen potential medicines awaiting regulatory approval or in the final stage of clinical studies, plus 26 more in phase 2 human testing. The nearly 40 compounds are five times more than Lilly had in mid- or late-stage development in 2004.

Whether all that is enough to offset the combined loss of $10 billion in annual Zyprexa and Cymbalta sales is unclear.

"We expect the company's initiative, coupled with its strong drug pipeline and the positive response for its new drugs ... will help the company maintain its future earnings ... and drive the investors' confidence," said Fusion Equity Research, a Tallahassee, Fla., equity research firm in an October investors' report.

Longtime Goldman Sachs drug stock analyst Jami Rubin is less optimistic. Goldman downgraded Lilly stock this fall to sell from neutral, writing, "We don't think Lilly has gone far enough to address its upcoming challenges from patent expirations. Uncertainty ... exists as much today as it did a couple years ago when management came out with 2014 (earnings) guidance. Yet, Lilly trades at a premium valuation for a pipeline which we view as underwhelming."

Lilly stock, which closed at $50.51 a share Tuesday, trades at the low end of its 52-week range of $47.53 to $58.40.

Lilly doesn't expect to return to a period of fatter profits for another year at least.

Recent pipeline dropouts haven't helped. A promising Alzheimer's drug candidate ran into disappointing clinical trial results, though Lilly still has high hopes for using it to treat patients with mild dementia. Other recent clinical trial failures have tripped up a breast cancer compound and an antidepressant.

Still, Lilly remains undaunted and has submitted four potential new medicines for regulatory approval this year with more anticipated next year, Derica Rice, chief financial officer, said last week.

"We've made substantial progress on our No. 1 priority — advancing our pipeline," he said.

Call Star reporter Jeff Swiatek at (317) 444-6483. Follow him on Twitter: @JeffSwiatek.

Cymbalta's history

• 1984 — Lilly researchers David Robertson and David Wong begin working on duloxetine, the scientific name for Cymbalta. Joseph Krushinski would also be listed on the patent as a co-inventor.

• 1990 — Initial patent granted.

• 1990s — Early human trials of the drug end in failure. It proves no more effective against depression than a placebo. The drug is shelved, then brought back for testing when researchers realize they'd been testing it at too low a dose. Higher-dose tests show efficacy in depressed patients and in pain trials.

• 2001 — New drug application filed with Food and Drug Administration. Approval is held up, in part, by quality issues at Lilly manufacturing plant.

• February 2004 — Bible college student Traci Johnson commits suicide by hanging, while testing Cymbalta in a Lilly dosing trial in Indianapolis. FDA later concludes her suicide wasn't caused by the drug.

• August 2004 — FDA approves Cymbalta for sale to treat depression and diabetic neuropathy. Average wholesale price: about $2.85 a capsule.

• 2005 — Lilly reportedly reaches settlement with Johnson's family after a mediation fails but before a lawsuit is filed.

• 2007 — FDA approves Cymbalta to also treat generalized anxiety disorder.

• 2012 — Cymbalta sales peak at $4.99 billion; it's Lilly's best-selling drug.

• June 2013 — FDA grants six-month "pediatric extension" to Cymbalta patent.

• Dec. 11, 2013 — Compound patent expires on Cymbalta, allowing generic competition. Average wholesale price now before discounts: about $7.27 per capsule.

Source: Star archives