The U.S. Food and Drug Administration did not approve the marketing application for baricitinib, a medication that Eli Lilly and Co. (LLY, Financial) is developing with Incyte Corp. (INCY, Financial) for treating patients with rheumatoid arthritis, according to a news release published through Business Wire.
Eli Lilly and Incyte were seeking approval to commercialize its JAK inhibitor in the U.S. market.Ă‚
According to the company, the FDA said in its letter that it “is unable to approve the application in its current form” because “additional clinical data are needed to determine the most appropriate doses” and “are necessary to further characterize safety concerns across treatment arms.”
The treatment's commercialization was approved in Europe in February.
The two companies said they do not agree with the FDA's conclusion and are considering filing another marketing application.
“We are disappointed with this action. We remain confident in the benefit/risk of baricitinib as a new treatment option for adults with moderate-to-severe RA," Christi Shaw, Eli Lilly's president of biomedicines, said. “We will continue to work with the FDA to determine a path forward and ultimately bring baricitinib to patients in the U.S.”
After the FDA's decision, shares of the two companies tumbled on the stock market.
Eli Lilly closed at $82.51 per share yesterday, down $3.50 or 4.08% from the previous trading day, with a volume of 12.4 million shares traded on the New York Stock Exchange.
The drug manufacturer headquartered in Indianapolis is selling with a price-book ratio of 6.18 and a price-sales ratio of 4.09. The company closed fiscal year 2016 with EPS of $3.52 and revenue of $21.22 billion, a 6.3% increase from the previous year.
Analysts rated the stock as a buy with a recommendation rating of 2. The average target price is $89.05 per share, which represents a nearly 8% upside from the current share price.
Shares of Incyte fell 10.49%, or $14.77, yesterday to $126.07 per share with a volume of 6.79 million shares traded on the Nasdaq.
In contrast, AbbVie Inc. (ABBV, Financial) closed at $64.31 per share, up 18 cents or 0.28% from the previous trading day. Pfizer Inc. (PFE, Financial) closed at $34 per share, up 12 cents or 0.35%, and Gilead Sciences Inc. (GILD, Financial) closed at $66.70 per share, up 19 cents or 0.29%.
Disclosure: I have no positions in any stock mentioned in this article.
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