With competition threatening to chip away at its diabetes stronghold, Eli Lilly is shoring up its pipeline with a deal that gives the company access to a potential new class of diabetes drugs.
Indianapolis-based Lilly (NYSE: [[ticker:LLY]]) has agreed to pay $55 million up front to KeyBioscience in exchange for rights to compounds in various stages of development as treatments for type 2 diabetes and other metabolic disorders. KeyBioscience, a subsidiary of Denmark-based Nordic Bioscience, will be eligible for additional payments tied to development and regulatory milestones. If drugs from the collaboration reach the market, KeyBioscience would receive royalties from drug sales.
Lilly was drawn to KeyBioscience’s drug technology, which could offer an advantage over its current lineup of diabetes drugs. The Dual Amylin Calcitonin Receptor Agonists (DACRA) drug platform develops drugs to hit two targets, the calcitonin and amylin receptors. The companies say that acting on both receptors could have a range of benefits including improving insulin sensitivity, suppressing food intake, and causing weight reduction. KeyBioscience’s lead drug, KBP-042, has started Phase 2 clinical trials. The deal gives Lilly global rights to that compound and others from the DACRA platform.
Lilly’s top seller last year was Humalog, a fast-acting injectable insulin that accounted for $2.7 billion of the company’s $21.2 billion in revenue. Humalog’s 2016 sales were down 3 percent compared to 2015. Though Humalog has lost patent protection, it hasn’t experienced steep drops in sales yet. That’s because as a biological drug, it’s harder for competitors to develop biologically similar products. Analysts expect Humalog will begin facing competition from so-called biosimilars in 2018 and 2019.
Lilly has taken steps to strengthen its position in diabetes drugs. In March, Lilly unveiled an $850 million capital investment plan that includes expansions to sites involved in manufacturing its diabetes products.
During a conference call in April to discuss the first-quarter financial results, CEO David Ricks said that Lilly would be interested in acquisitions that bring to the company compounds in diabetes, as well as oncology, immunology, Alzheimer’s disease, and pain treatment. He added that the company will make deals that produce “interesting combinations or fill gaps,” according to a Seeking Alpha transcript of the call.
Photo by Flickr user Paul Sableman via a Creative Commons license.
