There were a couple of pieces of news on Eli Lilly that came out yesterday. Firstly, Lilly announced that it has struck a deal to buy Avid Radiopharmaceuticals for up to $800 M - structured as a $300 M upfront plus milestones up to $500 M. See Fierce Biotech.
Avid is a diagnostics company that has developed a new approach for the detection of Alzheimer's with its molecular imaging agent, Florbetapir F-18, used to detect amyloid plaques. F-18 has been submitted to the FDA for approval. F-18 allows plaques to be detected in living patients brains - something currently unavailable until after the patient's death - so a proven diagnostic for the living is considered a big step forward. Plaques viewed by Florbetapir may be visible for up to 10 years prior to symptoms developing and the test might be used to monitor disease progression as well.
Lilly just had its lead Alzheimer's therapeutic drug Semagacestat go down in phase III clinicals earlier in the year - so this purchase of a companion diagnostic signals strongly that it hasn't given up on the Alzheimer's area for investment and drug development. Lilly is still looking for the Alzheimer's home run. It has solanezumab, an antibody designed to disrupt amyloid clumps, as its replacement lead candidate to Semagacestat. Phase III results are expected next year.
Lilly also has a BACE called LY2811376 in phase I. BACE acts to inhibit B-secretase thought to be involved in B-amyloid formation. Thus, the diagnostic test acquired might serve as a useful companion to both these drugs either in diagnosing patients earlier for treatment or in monitoring disease progression or drug efficacy. See Seeking Alpha.
Fierce Biotech also reported that despite the possible excitment that an Avid Radiopharmaceuticals acquisition might engender, the rating agency Moody's Investors downgraded Lilly to A2 - halfway between Aaa and junk. Ouch! Basically, Moody's says Lilly has lost global competitive position through patent expirations, pipeline setbacks, and disappointing product launches of drugs that actually hit the market. The triple whammy. And, Lechleiter still refuses to buy anyone large enough to impress the analysts given the factors cited above.
Lilly may need to pull a rabbit out of a hat or at least its pipeline for this perception to change.
Posted by Bruce Lehr November 9th 2010.