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Eli Lilly's Olumiant Gets FDA Nod for Rheumatoid Arthritis

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Eli Lilly and Company (LLY - Free Report) along with its partner Incyte Corporation (INCY - Free Report) announced that the FDA has approved the 2 mg dose of Olumiant (baricitinib) for treating moderately-to-severely active rheumatoid arthritis (“RA”). The once-daily oral JAK inhibitor is approved as monotherapy or in combination with methotrexate for treating adult patients with inadequate response to tumor necrosis factor (“TNF”) inhibitor therapies.

The approval in the United States was not much of a surprise considering that an FDA advisory committee had recommended approval of the lower dose of the drug in April. However, the 4 mg dose of the drug was not approved.

Moreover, the drug’s label includes a boxed warning stating risk of serious infections, malignancies and thrombosis.

The companies expect to launch the drug by the end of the second quarter. It will be available at a price 60% lower than the leading TNF inhibitors approved for RA, which includes AbbVie’s (ABBV - Free Report) Humira and Amgen’s (AMGN - Free Report) Enbrel among others.

We remind investors that the FDA had issued a Complete Response Letter in April 2017 for the new drug application seeking approval of Olumiant, requesting additional information to determine the most appropriate doses.

Olumiant is already approved in Europe and Japan and generated sales of $32.2 million in the first quarter of 2018. The U.S. approval will further boost the sales of the drug.

Lilly’s share price has increased 0.5% year to date compared with the industry’s decline of 4.4%.

The approval was based on data from RA-BEACON study, which evaluated Olumiant in combination with disease-modifying anti-rheumatic drugs versus placebo. Data showed that 49% of the patients treated with Olumiant achieved improvement in the signs and symptoms of RA compared to placebo (27%).

The companies will conduct a long-term safety study of Olumiant in RA patients as part of the approval.

Following approval in the United States, Incyte is now eligible to receive a milestone payment of $100 million from Lilly, which it expects to record in full in the second quarter of 2018.

Olumiant is also being evaluated in a late-stage study for the treatment of atopic dermatitis.

Lilly currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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