Eli Lilly Plans Spending Spree for 2020
Eli Lilly’s senior vice president and chief financial officer Josh Smiley announced plans for the Indianapolis-based pharmaceutical company to spend from $1 billion to $5 billion each quarter this year as it plans to bolster its pipeline.
They’ve already gotten off to a good start. Last Friday the company announced that it was buying California-based Dermira for $1.1 billion in cash. The deal expands Lilly’s immunology pipeline with a late-stage compound for atopic dermatitis. In particular, Lilly picked up two assets with the company, lebrikizumab, a monoclonal antibody that binds to IL-13, a driver of atopic dermatitis. It is currently in two Phase III trials. It also gained Qbrexza (glycopyrronium) cloth, a medicated cloth the FDA approved for topical treatment of primary axillary hyperhidrosis, which is to say, uncontrolled excessive underarm sweating.
At the time, Patrik Jonsson, president of Lilly Bio-Medicines, noted, “This acquisition provides an opportunity to add a promising Phase III immunology compound for atopic dermatitis, while also adding an approved dermatology treatment for primary axillary hyperhidrosis. We look forward to completing the acquisition and continuing Dermira’s excellent work.”
Over the last two years, Lilly has made several oncology acquisitions, including its $8 billion takeover of Loxo Oncology. In 2018, the U.S. Food and Drug Administration approved Vitrakvi, Loxo’s first commercial drug for a broad range of solid tumors that have a neurotrophic receptor tyrosine kinase (NTRK) gene fusion without a known acquired resistance mutation, or metastatic or where surgical resection is likely to result in severe morbidity and have no satisfactory alternative treatments or that have progressed after treatment.
In a presentation at this week’s JP Morgan Healthcare Conference in San Francisco, Lilly’s chief executive officer David Ricks indicated that most of the deals will be in oncology, but the company is interested in other areas as well.
Smiley said they were looking for late-stage assets, but that most opportunities for shareholders were for drugs in earlier stages of development. They’re also open to various approaches, such as licensing deals or outright acquisitions.
“We are looking at Dermira-like opportunities targeting assets in the $1 billion to $5 billion range,” Smiley said. “We’d like to do something in the range of one per quarter or so.”
The company projected higher-than-expected profits for 2020, noting high demand for its newer drugs like Trulicity for diabetes and Taltz for psoriasis and other autoimmune diseases. However, the diabetes market is notoriously facing pricing pressures in the U.S. as well as high rebates and discounts paid to pharmacy benefit managers.
Earlier this week, Lilly announced lower-priced versions of Humalog Mix75/25 KwikPen (insulin lispro protamine and insulin lispro injectable suspension 100 units/mL) and Humalog Junior KwikPen (insulin lispro injection 100 units/mL). They will both be marked down 50% compared to the branded versions and will be made available by mid-April. These insulin products are identical to the branded versions and may be substituted at the pharmacy. This move came as U.S. politicians continue to criticize the industry over the rising costs of insulin and prescription drug prices. Insulin for diabetic patients has become something of a flashpoint for the drug-pricing debate related to reports of patients rationing their insulin because of the increased costs.
This was Lilly’s second attempt at introducing lower-cost insulins. In May 2019, two months after regulatory approval, the company’s authorized generic formulation of Humalog went on sale at a 50% lower price than its branded form of insulin. However, an August analysis indicated patients weren’t getting the cheaper version, partly because of lack of awareness of the product.