Lilly prepares to inject $150M into three new biotech funds

Following a series of bitter setbacks in the clinic, Eli Lilly plans to add $150 million to three new biotech venture capital funds that would total $750 million. Lilly venture chief Darren Carroll tells Bloomberg, which broke the story, that the pharma giant expects to cover about 20 percent of each of the new funds, with each fund planning to equip itself with about $250 million in cash. Sources tell Bloomberg that CMEA Capital, an active biotech investor, was one of the three groups blueprinting new funds with Lilly.

There's nothing unusual about pharma companies investing in biotechs. GlaxoSmithKline, Novartis, Pfizer and several others have active venture funds of their own. In biotech, nothing builds relationships better than cash. But analysts note that Lilly, which in the next three years will lose patent protection on drugs providing almost half of its revenue, is trying something different by jumping on board other venture groups.

"To Lilly's credit, they're trying new things. Lilly has more to do than some others in terms of developing its pipeline," Les Funtleyder, an analyst with Miller Tabak & Co, tells the business news service.

Lilly's strategy is to back a total of 60 experimental medications, expecting about 15 to 20 will make their way to demonstrating clinical proof of concept. By working through the venture firms, Lilly wants the right of first refusal on deals structured on fair market value.

- see the Bloomberg article