News Release

June 05, 2004

At Least Half of all People with Diabetes Have Some Degree of Microvascular Complications¹

Eli Lilly and Company (NYSE: LLY) today announced key findings from two analyses of prior study data that may lead to improved outcomes for two major diabetic microvascular complications - diabetic neuropathy and diabetic retinopathy. One study presented during the 64^th Scientific Sessions of the American Diabetes Association (ADA) described the correlation between vibration detection testing - a comfortable way of testing nerve function, and commonly used nerve conduction studies which are costly and associated with patient discomfort. A second set of data pinpointing a critical phase in the progression of diabetic macular edema, a complication of diabetic retinopathy, suggest that earlier treatment may minimize vision loss in people with diabetes.

The three major diabetic microvascular complications include diabetic neuropathy, diabetic retinopathy and diabetic nephropathy. Diabetic microvascular complications result from damage to the small blood vessels in the nerves, eyes and kidneys, and eventually lead to loss of function in these tissues.^{1, 2a-d, 3} If undetected and untreated, these complications can potentially lead to severe organ damage possibly resulting in limb amputation, blindness, and kidney failure.

"Diabetic microvascular complications are among the most devastating problems a person with diabetes will experience," said Louis Vignati, M.D., medical director, Eli Lilly and Company. "Despite improved treatments, millions of people with diabetes continue to suffer the consequences of the disease. Anything Lilly can do to help simplify screenings and promote earlier treatment is an important part of our mission."

The American Diabetes Association (ADA) recommends people with diabetes visit their doctor every three to six months to help detect the early signs of diabetic neuropathy⁴ and recommends an annual dilated eye exam to reduce the risk of vision loss⁵, yet last year in the United States, nearly one-third of people with diabetes did not have an eye or foot exam.⁶

An Easier Test for Diabetic Peripheral Neuropathy

Diabetic peripheral neuropathy, the most common form of diabetic neuropathy, affects up to 50 percent of people with diabetes.^2b,7 It leads to more than 80,000 amputations each year in the United States.⁸ The current "gold standard" test for identifying diabetic peripheral neuropathy in its earliest stage is a neurological evaluation in combination with nerve conduction testing, which is uncomfortable for patients and require sophisticated equipment and a highly trained operator.

In the first of the two analyses presented at ADA, researchers sought a correlation between nerve conduction studies and vibration detection threshold test (VDT), which is comfortable for patients and requires minimal technical skill from the operator. Findings showed a significant correlation between the two methods, which may lead to more frequent screenings for diabetic neuropathy and earlier diagnosis and treatment in the primary care setting.

Diabetic Macular Edema

Diabetic macular edema is a swelling of the macula due to leakage of fluid from damaged retinal blood vessels.^{9, 10}The macula is an area near the center of the retina responsible for daytime vision and color detection.¹¹ Severity of diabetic macular edema is believed to be determined according to how close swelling is to the center of the macula.

The second analysis presented at ADA explored visual acuity in people with various degrees of diabetic macular edema to better understand how diabetic macular edema's distance from the macular center impacts vision loss. Findings confirmed that diabetic macular edema does not appear to impair vision until it involves the center of the macula. These data suggest the key to minimizing vision loss is earlier detection through increased screenings and treatments that inhibit progression of diabetic macular edema toward the center of the macula.

Details of the Analyses

The first analysis included 205 people with diabetes who were participating in a Phase 2 multicenter clinical trial for Lilly's ruboxistaurin, currently being investigated as a possible treatment for diabetic retinopathy and diabetic neuropathy, both diabetic microvascular complications. Study findings showed significant correlation between the VDT and standardized neurological examination of lower limbs and composite scores of nerve function. The authors concluded that in patients with diabetic peripheral neuropathy, VDT correlates with electrophysiological attributes and composite scores of lower limb function.

The second analysis included 939 patients with various levels of diabetic macular edema and who participated in two clinical trials for ruboxistaurin (PKC-DRS and PKC-DMES).

Patients in the PKC-DRS trial had various degrees of diabetic macular edema, ranging from none to center involvement at baseline. Findings from the PKC-DRS group showed that visual acuity did not decline until the center of the macula was involved by retinal thickening when it declined by over 20 letters (four lines on a standard eye chart).

Data from the PKC-DMES trial showed that 33 percent of patients with retinal thickening >500m from the center of the macula eventually developed center thickening. Comparatively, 50 percent of patients with retinal thickening <500m from the center went on to develop diabetic macular edema at the center of the macula.

Lilly, a leading innovation-driven corporation, is developing a growing portfolio of first-in-class and best-in-class pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. Headquartered in Indianapolis, Ind., Lilly provides answers - through medicines and information - for some of the world's most urgent medical needs. Additional information about Lilly is available at www.lilly.com.

This news release contains forward-thinking statements that reflect management's current beliefs about the potential for ruboxistaurin as a treatment of diabetic microvascular complications. However, as with any pharmaceutical under development, there are significant risks and uncertainties in the process of development and regulatory review. This product has not yet been proven safe and effective. There are no guarantees that the product will receive necessary regulatory approvals or prove to be commercially successful. For additional information about the factors that affect the company's business, see the company's filings with the United States Securities and Exchange Commission. The company undertakes no duty to update forward-looking statements.

References

1. World Health Organization, Diabetes Fact Sheet. Available at:http://www.who.int/mediacentre/factsheets/fs138/en/. Accessed May 28, 2004.
2a-d. American Diabetes Association, Diabetes Dictionary. Available at:http://www.diabetes.org/diabetesdictionary.jsp?pageID=3&exitDictionaryTo=  . Accessed May 21, 2004.
3. American Diabetes Association, National Diabetes Fact Sheet. Available at:http://www.diabetes.org/diabetes-statistics/national-diabetes-fact-sheet.jsp. Accessed May 21, 2004.
4. National Institute of Mental Health, Depression and Diabetes. Available at: http://www.nimh.nih.gov/publicat/depdiabetes.cfm. Accessed May 21, 2004.
5. Touchette, N. American Diabetes Association Complete Guide to Diabetes Third Edition. Port City: Off-Press Publishing.
6. Touchette, N. American Diabetes Association Complete Guide to Diabetes Third Edition. Port City: Off-Press Publishing.
7. Medical Expenditure Panel Survey, 2000, National Healthcare Quality Report 2004.
8. Gordois A, Scuffham P, Shearer A, Oglesby A, and Ash Tobian J. The Health Care Costs of Diabetic Peripheral Neuropathy in the U.S. Diabetes Care 26: 1790-1795
9. American Diabetes Association, National Diabetes Fact Sheet. Available at:http://www.diabetes.org/diabetes-statistics/national-diabetes-fact-sheet.jsp. Accessed May 21, 2004.
10. Klein R, Klein B. National Institute of Diabetes & Digestive & Kidney Diseases, Vision Disorders in Diabetes. Available at:http://diabetes.niddk.nih.gov/dm/pubs/america/pdf/chapter14.pdf. Accessed May 21, 2004.
11. Touchette, N. American Diabetes Association Complete Guide to Diabetes Third Edition. Port City: Off-Press Publishing.