Lilly eyes R&D investments with $1B-plus Amylin windfall
The acquisition of Amylin Pharmaceuticals has brought an unexpected influx of cash to former partner Eli Lilly ($LLY). The Indianapolis-based drug giant pockets an early payment of $1.26 billion from Amylin because of the $5 billion sale of the San Diego diabetes specialist to Bristol-Myers Squibb ($BMY). Lilly had expected the money to come in over a number of years as part of its agreement to break ties with Amylin last year on the development of diabetes drugs.
"With this additional cash, we will continue to advance our pipeline of more than 60 potential new medicines in development, as well as fund capital expenditures, business development activity, our dividend and share repurchases," Lilly financial chief Derica Rice said in a company statement Thursday.
The money boosts Lilly's balance sheet as the company plows ahead with a major gamble on late-stage development of the Alzheimer's drug, solanezumab, which has been tagged as a long shot for success in Phase III studies to treat the memory-robbing disease but could yield billions in annual revenue if it succeeds. The drug offers a potential ticket to wipe out the profit pains at the drug giant from generic attacks on sales of Zyprexa and soon Cymbalta. And CEO John Lechleiter has bet on several more late-stage contenders to lead the company's future growth without requiring him to pull the trigger on a major acquisition.
Alzheimer's aside, Lilly has run amid a pack of pharma groups seeking growth in the fast-expanding market for diabetes drugs. With Amylin, Lilly had partnered on the development of GLP-1 drugs Byetta and Bydureon, but the relationship went south after Amylin filed a lawsuit against Lilly stemming from the drug giant's decision to partner with German drugmaker Boehringer Ingelheim on development of drugs for the metabolic disorder. Its diabetes pipeline features a basal insulin analog called LY2605541 that has provided impressive results in mid-stage trials, including signs of a weight-loss benefit, and is now partnered with BI for late-stage studies.
If solanezumab turns out to be a turkey in Phase III as many expect, count on Lechleiter to lean heavily on his diabetes pipeline to restore faith in his big bet on the company's own drug candidates. And this week he's clearly cashing in on Bristol's decision to go out and buy new drugs in the blockbuster Amylin acquisition.
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