Eli Lilly to launch share buyback program, new drugs

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Eli Lilly (LLY) plans to launch new medicines in 2014, to make up for lost revenue after patent protection on two profitable drugs expires.  Company leaders spoke to investors about Lilly's long-term outlook at 8:30 Thursday morning.

So far, the company has filed a record seven regulatory submissions of four molecules in 2013. It expects to continue to advance more medicines through late-stage development, approval and launch. Eli Lilly said its pipeline is the strongest it's ever been, with 13 potential medicines in Phase 3, the final stage of clinical studies and 26 more in Phase 2.

Patent protection on Eli Lilly's Cymbalta expires at the end of the year. Despite the expiration, Lilly reaffirmed its near-term goals of generating at least $20 billion in revenue, $3 billion in net income and $4 billion in operating cash flow next year.  

Dr. John Lechleiter, Eli Lilly Chairman & CEO, said Lilly's strong pipeline of late-stage molecules will bring new medicines to patients and return the company to revenue growth after 2014. 

"We've undertaken extensive efforts to transform our company to address the challenge of patent expirations and the demands of patients and payers for greater value from medicine," Lechleiter said. "Today, we're seeing our strategy bear fruit, backed by clinical data that strengthens our confidence in our innovation-based strategy and in our ability to return to growth. We're determined to seize the tremendous opportunities before us and drive a new era of growth for Lilly and its shareholders, while delivering on our mission of improving the lives of patients."

In 2014, the company believes it could launch empagliflozin, dulaglutide, and ramucirumab, subject to regulatory approval.   

Chief Financial Officer, Derica Rice, said Eli Lilly should reach its financial goals for 2014 as it sees the full benefit of restructuring efforts in Europe and U.S.  The company will also save on research and development costs as the pipeline moves into regulatory submission.

Beyond 2014, Rice expects continuing revenue growth in four of its five business: Diabetes, Oncology, Emerging Markets and Animal Health. The fifth, Bio-Medicines will take a hit from the loss of marketing exclusivity on Cymbalta and Evista.

Lilly also confirmed it expects to maintain its dividend at least at its current level and announced it will supplement its annual dividend of approximately $2 billion per year with share repurchases totaling $5 billion over time.

The stock has slipped recently, after the Centers for Medicare and Medicaid Services denied patient access to its Amyvid drug.  Amyvid is used in imaging brain scans for patients being assessed for Alzheimer's disease.  Eli Lilly said it was disappointed in that decision, and will look at all options to get the drug to patients.

Shares also fell last week, when Eli Lilly said its experimental cancer drug, ramucirumab did not meet its target in a large trial of late-stage breast-cancer patients. The company has been hoping the drug could be effective in a wide range of tumors. In a separate study, Eli Lilly said ramucirumab met its goal of improving survival in patients with stomach cancer.   Eli Lilly expects results of ramucirumab's effect on colorectal, hepatocellular and lung cancer in 2014.

Read the full press release here.