(LLY) Eli Lilly Launches Type II Diabetes Treatment Tradjenta

Eli Lilly and Company (LLY) and partner Boehringer Ingelheim Pharmaceuticals, Inc. recently announced that their type II diabetes treatment, Tradjenta (linagliptin) is now available in pharmacies across the US. Tradjenta, which has been priced at $6.77 per tablet, is available at Walgreen (WAG), CVS Caremark Corp. (CVS), Rite Aid Corp. (RAD) and several other leading chain and independent pharmacies as well.

Eli Lilly and Boehringer are working on gaining formulary coverage for the product and are looking to get Tradjenta reimbursed at a co-pay level similar to other preferred branded products.

Eli Lilly and Boehringer’s strategic alliance, signed in Jan 2011, is focused on bringing new diabetes treatments to market. However, in May 2011, Eli Lilly’s exenatide partner, Amylin Pharmaceuticals, Inc. (AMLN) filed a lawsuit against Eli Lilly.

Amylin claimed that Eli Lilly is engaging in anticompetitive activities thereby breaching its agreement for the maximization of sales of exenatide, which is currently available under the trade name, Byetta. It is also being developed as a once-weekly treatment (Bydureon) of type II diabetes.

Amylin’s main complaint is regarding Eli Lilly’s global alliance with Boehringer for the development and commercialization of Tradjenta. According to Amylin, Tradjenta, which received US Food and Drug Administration (FDA) approval in early May, will compete directly with the exenatide family.

Amylin had filed a motion seeking a preliminary injunction to enjoin Eli Lilly from engaging in anticompetitive activity and breaching its diabetes collaboration agreement with Amylin.

However, in early June, the United States District Court for the Southern District of California denied Amylin’s motion. Moreover, the court also vacated a temporary restraining order preventing Eli Lilly from using the same sales force for selling exenatide as well as Tradjenta.

Neutral on Eli Lilly

We currently have a Neutral recommendation on Eli Lilly, which carries a Zacks #3 Rank (short-term Hold rating). Eli Lilly will enter a tough period in late 2011 with the loss of exclusivity on Zyprexa. Barring significant cost-cutting efforts or additional revenue catalysts, 2013 will be the beginning of a very challenging period with Cymbalta losing US patent protection. On the flip side, strong performance of the diabetes business, the ramp of Effient and upside from the ImClone deal should offer some downside support. We are also pleased to see Eli Lilly pursuing small acquisitions and in-licensing deals to boost its pipeline.

AMYLIN PHARMA (AMLN): Free Stock Analysis Report

CVS CAREMARK CP (CVS): Free Stock Analysis Report

LILLY ELI & CO (LLY): Free Stock Analysis Report

RITE AID CORP (RAD): Free Stock Analysis Report

WALGREEN CO (WAG): Free Stock Analysis Report

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