The Waiting Game Continues For Lilly & ImClone


Eli Lilly has been running direct-to-doctor ads over the past few months telling physicians that Effient, the company's new bloodthinner, is "Coming Soon." Well, it may have jumped the gun.

The Food and Drug Administration, which had put Effient on a fast-track toward potential approval, has now twice delayedmaking a decision on the drug. The company has said that the application for approval was its biggest ever--that it would stack nearly as high as the Empire State Building--and, so, the FDA has a lot of stuff to look at. But investors and some analysts are losing patience.

Les Funtleyder at Miller Tabak writes in a research note to clients, "This has become a bit of an unsettling trend at the FDA. The decision tree used to be pass or fail, now there is a third column the I don't know."

Bert Hazlett at BMO Capital Markets shares that sentiment. He titled his note, "Anyone home at the FDA?" Ouch.

Catherine Arnold at Credit Suisse says, "FDA management has publicly stated that it may miss (drug approval) dates this year due to staffing constraints and this drug application appears to be another victim." Nonetheless, she thinks a decision will come in days to weeks, not months.

Barbara Ryan at Deutsche Bank agrees. "The delay is likely to be rather short, as the FDA is in the late stages of the review, and did not request more data," she writes in a research note this morning.

But Chris Schott at JPMorgan thinks the agency could ask for more data. "This (delay) trend is yet another example of the extremely challenging regulatory environment," Schott, who has an "Underweight" rating on LLY, is telling clients. He doesn't see things getting any better at the FDA until well after a new administration takes over. And speaking of the new administration...FDA Commissioner Dr. Andrew von Eschenbach was scheduled to finally come on "Squawk Box" for an hour last week, but because of the overriding situation with the financial bailout, his appearance had to be canceled. Had he kept his original confirmed date back in August, there wouldn't have been a conflict.

And a couple of final analyst opinions on LLY. Seamus Fernandez at Leerink Swann and Steve Scala at Cowen & Co. think it could go beyond the need for more data. "We believe there is a chance FDA ultimately requests a panel review, but FDA's recent decisions...lack consistence & predictability based solely on a panel or lack thereof," Fernandez writes in a research note to clients. And Scala says, "This delay increases the possibility of an FDA panel." A panel is an FDA advisory committee, which is an outside group of experts that examines drugs that have issues and can slow down the approval process.

The delay is at least a short-term negative for LLY. But it gives the makers of the blockbuster bloodthinner Plavix, Bristol-Myers Squibband Sanofi-Aventis, a little more time to maintain the corner on the market.

I will be off tomorrow for the Jewish new year. Shortly after the end of Rosh Hashana, by the way, ImClone announced this morning that its $70-a-share mystery bidder will make a go, no-go decision. The suitor is still anonymous, only identified in today's press release as a "large Pharma company"--with a capital P. Is that a Carl Icahn hint? Hmm.

Questions? Comments?