INDIANAPOLIS — Drugmaker Eli Lilly and Co. reported better-than-expected earnings for the first quarter and said regulators had agreed to a fast-track review of its potential stomach cancer treatment.
But shares of the Indianapolis company fell in afternoon trading Monday as the performance failed to impress investors. Analysts said the fast-track review was largely expected, a one-time tax credit buttressed Lilly's performance, and its revenue came in flat compared with last year.
"I just think there wasn't a ton of good news there," Edward Jones analyst Judson Clark said.
Morningstar analyst Damien Conover said lower selling and administrative expenses also helped Lilly's bottom line. He expects both to climb along with the tax rate.
"Whenever there's a tax rate implication, investors usually aren't as enthusiastic (about the performance)," he said.
Lilly's earnings jumped 53 percent in the quarter largely due to a $495 million payment for the transfer to former drug development partner Amylin Pharmaceuticals of commercial rights outside the United States for the diabetes treatment exenatide.
Overall, Lilly earned $1.55 billion, or $1.42 per share, in the three months that ended March 31. That compares to $1.01 billion, or 91 cents per share, in last year's quarter.
Not counting the exenatide payment, Lilly reported adjusted earnings of $1.14 per share. Analysts expected, on average, earnings of $1.05 per share, according to FactSet.
The drugmaker said its revenue stayed flat at $5.6 billion, as lower sales volume and unfavorable foreign exchange rates countered gains from higher prices. Analysts expected $5.67 billion in revenue.
Lilly also said Wednesday the Food and Drug Administration will evaluate the cancer treatment ramucirumab under a program designed for drugs that treat serious or life-threatening diseases for which there are few other therapies. Fast-track status gives companies extra meetings and correspondence with regulators throughout the review process, and it allows the drugmaker to submit data as it compiles it.
Lilly is seeking approval for ramucirumab as a second treatment in patients with gastric and gastroesophageal junction cancers that have spread. Gastric cancer affects the stomach lining and often goes undetected while developing slowly. Gastroesophageal junction cancer forms where the esophagus connects to the stomach.
Lilly also recently submitted a new type 2 diabetes treatment it developed with German drugmaker Boehringer Ingelheim to the FDA. The company said Wednesday that treatment and ramucirumab are the first two of what could be five drugs submitted to U.S. regulators this year.
Investors are watching Lilly's pipeline of developing drugs closely because the company is losing U.S. patent protection for some key products, and it needs to replace that revenue. Lilly lost patent protection for its all-time best selling drug, the antipsychotic Zyprexa, in late 2011, and sales of that drug have plunged since it became exposed to cheaper generic competition. The company also loses protection at the end of this year for current top-seller, the antidepressant Cymbalta.
Revenue from Cymbalta rose 19 percent to $1.33 billion in the first quarter, and sales of the erectile dysfunction drug Cialis climbed 11 percent to $515 million. But revenue from Zyprexa tumbled 49 percent to $284.8 million.
Lilly also reaffirmed its forecast for 2013 earnings to range between $3.82 and $3.97 per share on $22.6 billion to $23.4 billion in revenue.
Analysts expect, on average, earnings of $3.90 per share on $23 billion in revenue.
Lilly shares fell 3.2 percent, or $1.89, to $56.44 in afternoon trading after hitting a 52-week high of $58.40 on Tuesday. The stock is still up about 14 percent so far this year.