'Old News'

Analysts did not seem concerned about two front-page articles in The New York Times alleging that Eli Lilly downplayed the side effects of its antipsychotic drug Zyprexa, and promoted its off-label use in dementia patients.

The company in recent years has been the subject of thousands of product liability suits charging that the drug causes diabetes. An attorney who represents mentally ill patients leaked internal memos and e-mails from the ongoing litigation to The Times, which published above-the-fold articles Sunday and Monday.

But analysts were unimpressed by The Times' double whammy, calling it old news. Zyprexa's ability to cause severe weight gain has been widely reported by physicians, and has been a factor contributing to a slowdown in sales over the past year. "We're all aware...of the side effect profile of Zyprexa," said Les Funtleyder, an analyst at Miller Tabak, who added, "It does highlight the risk of Lilly's dependence on Zyprexa as one of its long-term drivers."

In a statement, Lilly defended the drug, noting that "numerous studies" have failed to show that Zyprexa (olanzapine) causes diabetes. It also defended its conduct, emphasizing that the leaked documents represent a "tiny fraction" of the 11 million pages of material submitted as part of the litigation process.

Zyprexa is not the only schizophrenia treatment to be linked to weight gain and diabetes. FDA has required side effect warnings on a slew of atypical antipsychotics, including AstraZeneca's Seroquel (quetiapine), Janssen's Risperdal (risperidone), Pfizer's Geodon (ziprasidone), Novartis' Clozaril (clozapine), and Bristol-Myers Squibb's Ablify (aripiprazole).

"There's no [side-effect-free] antipsychotic," Funtleyder said, citing the CATIE (clinical antipsychotic trials of intervention effectiveness) study, a $42.2 million federal trial that began in 2000. The study compared the efficacy, safety, and cost-effectiveness of newer atypical antipsychotics with older drugs. But CATIE researchers also found that patients on Zyprexa put on more weight and had higher glucose and lipid metabolism than patients on other atypical antipsychotics. Lilly has funded proof-of-concept studies to see if it can determine why patients put on weight--and whether the drug can be reformulated to prevent the occurrence.

The news reports, however, underscore the many challenges the company faces in maintaining the momentum of its best-selling product.

Zyprexa had worldwide sales of $3.2 billion during the first nine months of 2006--a scant one percent increase over the same period last year.

"Zyprexa sales have slowed down in the US," said Martha Freitag, an analyst at Argus Research. "The company has been working very hard to support the product," such as emphasizing its use in acute care settings because of its fast-acting nature. But according to The Times, that sense of urgency may have driven aggressive tactics to promote the drug for use in patients with dementia, an indication for which it has never been tested.

Funtleyder noted that it remains to be seen whether the documents will add to Lilly's legal woes around the drug. The company has already settled about 10,500 product liability suits related to Zyprexa, and faces at least 1,500 more in six states and Canada. The first trials are expected to commence in April.