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New Sepsis Drug Prepares Lilly for Post-Prozac Era

Eli Lilly and Co. is finding there's life after Prozac.

Less than four months after Lilly watched income from its blockbuster antidepressant drop to a trickle with the emergence of a generic equivalent, the company is counting on a newly approved blood-infection drug to pick up some of the slack.

Xigris (pronounced (ZI'-gris) and eight other drugs Lilly intends to bring to market over the next three years have the Indianapolis-based pharmaceutical maker convinced it will prosper without Prozac. Lilly chief executive Sidney Taurel even boasted last month that the company is positioned to become the "pharmaceutical growth company of the decade."

Some analysts don't doubt him, especially after the government's approval of Xigris Nov. 21.

"Prozac is basically behind the company now, and overall, the company is in very good shape," said Hemant K. Shah, an independent industry analyst from Warren, N.J.

Lilly has spent the highest percentage of its sales totals on research and development in the industry for years, "and this perhaps to a degree is the fruit of that effort," said Tony Butler of Lehman Bros. in New York.

"I think you can look for accelerating earnings over the next five years," Butler said.

Lilly's fortunes sagged in August after it lost a court battle to keep its patent for Prozac. Lilly's longtime best seller brought in $2.6 billion last year.

A generic version by Pomona, N.Y.-based Barr Laboratories ate away at Lilly's market share faster than expected as doctors and health insurance plans encouraged patients to switch to the cheaper pill. Lilly's Prozac accounted for just 3.6 percent of new U.S. antidepressant prescriptions for the week ended Nov. 16, compared with about 20 percent in July, according to a survey by Credit Suisse First Boston.

Because of the Prozac setback and expensive plans to expand sales staff and new drugs, the company has warned of a possible earnings decline next year.

Lilly stock, which traded at $87 in June, sank below $74 a share on the New York Stock Exchange the week after the Sept. 11 terror attacks as news about Prozac's declining market share emerged. But the price has since recovered to the low $80 range.

Some of that boost came from Xigris' approval after a decade of failure by other companies to develop drugs targeting bloodstream bacterial infections, known as sepsis.

Emergency shipments of Lilly's intravenous drug began for critically ill patients a few days after its FDA approval, with wholesale shipments starting Nov. 26, Lilly spokesman Dan Collins said.

Severe sepsis strikes about 750,000 Americans a year, with nearly a third dying from infection-caused chemical reactions that destroy organs.

The FDA found studies of Xigris lowered mortality by 13 percent in those who initially had been deemed at the highest risk of death. The drug does have complications that can include severe bleeding and strokes, the FDA warned.

Xigris is a biologically engineered form of a natural blood product that is the first FDA-approved drug to directly attack the inflammation and blood clots accompanying sepsis. Lilly began its search for a sepsis drug about two decades ago.

Lilly isn't releasing sales projections for its new drug, but Collins said the company was confident it would do well on the market.

A study by pharmaceutical research publisher Decision Resources Inc. of Waltham, Mass., predicts annual Xigris sales of $754 million in 2005, with the possibility of more than $1 billion in sales in the prior year if the drug faces no viable competition by then.

Until now, antibiotics and life support such as mechanical ventilation and kidney dialysis have been the only tools for treating sepsis.

"Xigris will create a paradigm shift in the treatment of severe sepsis and septic shock," the Decision Research report said.

Shah, the analyst, said Xigris has the potential to be a multi-billion-dollar drug, with Lilly dominating the market.

Xigris is approved only for adult patients with severe sepsis in the United States. Lilly is seeking approval in Canada, the European Union, and Australia, and is working with the FDA to study whether Xigris will effectively treat children and adults with less severe sepsis.

One competitor, Emeryville, Calif.-based Chiron Corp., announced last month that a final-stage patient trial of its sepsis drug, Tifacogin, produced disappointing results.

And Bothell, Wash.-based ICOS Corp. isn't predicting when its sepsis product, Pafase, might hit the market.

Lilly "is quite a bit ahead of us," Bothell spokeswoman Lacy Fitzpatrick said.