Pullan Consulting
Biotech Business Development Consulting
www.pullanconsulting.com and www.lindapullan.com
email: lpullan@msn.com 805-558-0361
Issue #33
Pullan's Pieces
Commentary on Science & Business of Drug Development
For Business Development & Others
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A partnering profile of Eli Lilly
In this issue is my analysis of the public information on Lilly as a partner. (Lilly had no review).
Lilly Overview
Lilly has announced (at the start of 2008) that it is transforming itself from a FIPCO (a fully integrated pharmaceutical company) into a FIPNet (a fully integrated pharmaceutical network), leveraging external competencies, making collaborations a primary driver, and improving productivity. Lilly has had growing sales (to $20B per year – about half the size of GSK), and improving gross margins and earnings per share. Headcount has shrunk (down to 40,450 employees Dec 2008) since 2004, despite acquisitions. The number of new medical entities in the pipeline has doubled since the end of 2006, and biologics represent 40% of the clinical pipeline. Biopharmaceuticals are seen as vital to sustainable innovation.
Lilly R&D Structure
Lilly is focused on oncology, neuroscience, cardiovascular, endocrinology, and musculoskeletal therapeutic areas, with both small molecules and biologics. There are about 7000 people in Lilly Research Labs globally. Lilly several years ago set up an internal independent group, Chorus, to handle some of its pipeline in a lean externalization model, to get compounds to proof of concept faster and cheaper. In 2008, Lilly set up a joint venture in Bangalore, India with Jubilant Organosys to develop drugs from both companies to Phase II. Also in 2008, in a move to reduce costs and move drugs ahead more quickly, Lilly and Covance signed a 10-year $1.6B deal for Covance to take over responsibility for Lilly's non-GLP toxicology, in vivo pharmacology, quality control laboratory and imaging services. The deal also includes a committed level of clinical pharmacology, central laboratory, GLP toxicology studies and clinical Phase II-IV services. In that deal, Covance also took over the Greenfield, Indiana drug development campus, including about 260 employees.
Lilly Partnering Units
Lilly, like many large companies, separates the responsibilities of partnering, providing each group with an acronym. Global External Research and Development (GERD) is the evaluation group. Corporate Business Development (CBD) is the negotiators. Corporate Finance Investment Banking (CFIB) is responsible for financial analysis and for leading merger and acquisitions. And Lilly was one of the first to trumpet its Office of Alliance Management (OAM) for helping make the alliances work after the deal is signed.
In addition, there is Lilly Ventures, focusing on investing in companies with proprietary drug discovery or development technologies, in medical technologies at the convergence of drugs, devices or diagnostics, and in healthcare IT. Lilly Asian Ventures is pursuing similar investments, initially focused on investing in China.
Lilly 2008 Acquisitions
- SGX Pharmaceuticals (structure guided drug discovery in oncology) for $64 million in cash.
- ImClone Systems (antibodies, with Erbitux on the market with BMS) for $6.5 Billion in cash.
Lilly 2008 Alliances
Lilly shares few financial details of most of its deals. But there are interesting aspects to some of the 2008 deals. In the deal with Piramal, the two companies will each develop a drug to the same target with only one proceeding to Phase 3 and Lilly having a call-back option. This seems to reduce the program risk for Lilly at a reasonable cost. In the out-license with United Therapeutics, it appears there may be indication splitting with Lilly retaining global development in all indications and marketing for pulmonary arterial hypertension outside the US.
Deal Type | Stage Dev | Company | Therapeutic Area | Focus | Upfront | Milestones | Royalties | Other |
Joint Venture | Preclinical | Jubilant Organosys | oncology, metabolic disorders, cardiovascular and diabetes | The 50:50 JV will take preclinical molecules thru Phase II then return them to the IP owner for further development. |
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| The JV plans to spend $8M over 3 years. |
Co-Dev. | Preclinical | Piramal Life Sciences | various | Prior agreement in 2007. Both Lilly and Piramal will globally develop two different Lilly candidates against the same target and 1 will be chosen for Ph 3, after proof of concept trials. |
| Up to $110 million in call-back payments and milestones. | Plus royalties on sales. | The deal can be expanded to cover 4 compounds. |
Co-Dev/In- license | Phase II | TransPharma Medical | Osteoporosis | Lilly will get worldwide exclusive rights to ViaDerm-hPTH (1-34) product and will also gain non-exclusive access to TransPharma's ViaDerm drug delivery system | $35M | milestones | royalties | TransPharma and Lilly will both fund and participate in Phase II clinical development activities. |
In-License | Phase I | Transition Therapeutics | Diabetes | Transition’s gastrin therapies, including lead. Both Lilly and Transition will participate in Ph 2. | $7M | Up to $130M in development and sales milestones |
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In-license product and technology | Preclinical | Noxxon Pharma AG | Migraine | Lilly will develop and sell Spiegelmer (synthetic mirror image RNAs) and use technology to identify follow-ons | An initial payment, committed research funding | Milestones | Royalties |
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IP out-license, Option for license | Research | Archemix |
| Archemix gets IP from Lilly. Lilly gets an option to evaluate and license up to 2 Aptamer targets |
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Out-license | Preclinical | Magen Biosciences | Dermatology | Magen to develop and sell Lilly derm compounds worldwide |
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Out-License and Supply | Filed | United Therapeutics | Pulmonary Arterial Hypertension (PAH) | To market tadalafil for PAH in US. Lilly to supply. Lilly retains global development for all indications, and marketing for PAH outside US. | $150M |
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| Lilly to purchase $1500M in common stock in United Therapeutics |
Philanthropic co-dev license | Research | Summit | Infection (TB) | Thru Lilly TB Drug Discovery public: private partnership, to get rights to developing world |
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| Summit retains all rights in the developed world |
Research collaboration and License | Research | Deciphera Pharmaceuticals | Cancer | Discovery of selective and multi-targeted B-raf Kinase inhibitors | Upfront and research funding | Up to $130 M | royalties |
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Research tool | Research | Entelos | Diabetes | In silico research using the Metabolism Physiolab. |
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Research tool | Research | Champions Biotechnology | Cancer | ImClone (acquired by Lilly) will use Champions system of human tumor xenografts, said to more closely replicate human tumors |
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Special Offer – Presentation Critique for $500 to first 5 companies
Crafting your partnering presentation is critical. My blend of science and business, and my years on the in-licensing side, mean that I can offer you a thoughtful analysis of your partnering presentation. To give you a chance to see my work, I will review your non-confidential presentation and make suggestions for its improvement. I am sure you will find it worthwhile.
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Pullan Consulting
Linda M. Pullan, Ph.D.
Biotech Business Development
www.pullanconsulting.com and www.lindapullan.com
e-mail: lpullan@msn.com
805-558-0361
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