Lilly Loves Lechleiter--But Stock Moves On Other "News"


New Eli Lilly CEO John Lechleiter today joins the list of the recent fresh crop of big pharma honchos who've been elevated to Chairman of the Board as well.

Not a surprise. He replaces his predecessor in both positions, Sidney Taurel on New Year's Day. But that's not what's moving shares of LLYhigher this morning.

According to Thomson Reuters, Merril Lynch analyst David Risinger put out a research note to clients today saying, "We believe that FDA will approve LLY's prasugrel (bloodthinner) on Sept. 26th, and we see a short-term trading opportunity ahead of that event."

The planned commercial name for prasugrel is Effient. It would compete with Plavix from Bristol-Myers Squibb and Sanofi-Aventis. Risinger thinks the stock could rally six to nine percent with a "benign" label, two to three percent with a "restrictive" label and go down seven to eight percent if it isn't approved.

But MER still has a long-term "Underperform" rating on LLY because four of its top six drugs go generic between 2011 and 2014. I called Merrill to get a copy of the note for myself--standard operating procedure for reporters who quote analyst research--but a spokesperson told me the firm stopped giving its research to the news media more than a year ago. It's an outlier with that policy.

Most firms or the PR reps they hire are eager to see their analyst research quoted and their analysts appear on TV. Many of them send out daily blitz emails containing the day's analyst calls to reporters. So, I can't provide any disclosures on this one. And, again, the information from Risinger's note comes from the biopharma team at Thomson Reuters.

The patent expirations Risinger refers to is not only a major overhang for LLY, but for the entire sector. And it's a big reason investors have been selling the stocks of most of the major pharma pure plays. But, at least here in the early going, they're beginning to put their toes back into the water.

As Deutsche Bank's Barbara Ryan told me in an interview this morning, "Earnings for many many companies are going to be tremendously uncertain. And they (earnings) may not be sexy at drug companies, but they're pretty predictable as are those dividend checks."

Big pharma may not bring sexy back to Wall Street, but it could rekindle the flame.

    • BRIEF-Lilly's prasugrel cut heart attack risk in study

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