Morgan Stanley analyst David Risinger said expectations for Eli Lilly's (LLY) evacetrapib had risen after the drug was reformulated and called the discontinuation of the drug a "big disappointment," noting that the firm had modeled sales of $2.2B for the drug in 2020, or 8% of its company revenue estimate for that year. Regarding Merck's (MRK) competing CETP inhibitor, anacetrapib, Risinger noted that the REVEAL trial is being conducted in a much larger number of patients in a lower CV risk population and that anacetrapib lowered LDL more than evacetrapib in a Phase 2 trial.

Merck announced that the Phase 3 KEYNOTE-811 trial evaluating KEYTRUDA or pembrolizumab, Merck's anti-PD-1 therapy, in combination with trastuzumab and fluoropyrimidine- and platinum-containing chemotherapy met its dual primary endpoint of overall survival OS for the first-line treatment of patients with human epidermal growth factor receptor 2 or HER2 -positive locally advanced unresectable or metastatic gastric or gastroesophageal junction, GEJ, adenocarcinoma. Based on results from KEYNOTE-811, KEYTRUDA is approved in combination with trastuzumab and fluoropyrimidine- and platinum-containing chemotherapy for the first-line treatment of adults with locally advanced unresectable or metastatic HER2-positive gastric or GEJ adenocarcinoma whose tumors express PD-L1 as determined by an FDA-approved test. This indication is approved by the U.S. Food and Drug Administration FDA under accelerated approval regulations based on the objective response rate ORR and durability of response demonstrated at an earlier analysis. Continued approval of this indication may be contingent upon verification and description of clinical benefit at the final analysis of the KEYNOTE-811 study. In the final analysis of this trial, KEYTRUDA in combination with trastuzumab and chemotherapy demonstrated a statistically significant and clinically meaningful improvement in OS compared to placebo in combination with trastuzumab and chemotherapy in the intention-to-treat ITT study population, with the greatest benefit observed in patients whose tumors expressed PD-L1. The safety profile of KEYTRUDA in this trial was consistent with that observed in previously reported studies; no new safety signals were identified. Results will be presented at an upcoming medical meeting and shared with regulatory authorities worldwide.

Cantor Fitzgerald raised the firm's price target on Eli Lilly to $885 from $815 and keeps an Overweight rating on the shares. Despite the top-line miss that was widely anticipated due to incretin supply constraints, Eli Lilly's sales growth of 26% in Q1 is still impressive, the analyst tells investors in a research note. Zepbound is already annualizing at over $2B annually in the first full quarter into its launch, positioning the drug for tens of billions of sales, which means there could be upside to already bullish forecasts for Zepbound, and Lilly is well positioned to deliver on future growth with other key pipeline drugs and indications, Cantor says.

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Consensus $12.50. Raises FY24 revenue view to $42.4B-$43.6B from $40.4B-$41.6B, consensus $41.44B. Raises FY24 gross margin view to 33%-35% from 31%-33%. Sees FY24 tax rate 14%.