Lilly inks a $690M deal to get its hands on an autoimmune drug

Eli Lilly ($LLY) is betting up to $690 million that a drug from Korea's Hanmi Pharmaceutical can successfully treat an array of autoimmune diseases, licensing an early-stage candidate with ambitious plans for future trials.

Under the deal, Lilly will pay Hanmi $50 million up front for the ex-Asian rights to HM71224, a small-molecule candidate that blocks Bruton's tyrosine kinase (BTK)--much like Johnson & Johnson ($JNJ) and Pharmacyclics' ($PCYC) blockbuster oncology drug Imbruvica. Hanmi's drug, however, is directed at autoimmune ailments, the company said, including rheumatoid arthritis, lupus and the rare Sjögren's syndrome.

HM71224 came through in Phase I proof-of-mechanism studies, Lilly said, and the company is planning to roll into Phase II this year, promising to pay its partner up to $640 million extra in development and sales milestones. Lilly will handle development, regulatory work and manufacturing for the drug outside of Asia, and Hanmi is eligible for tiered double-digit royalties on eventual sales, the company said.

The blockbuster autoimmune field is largely dominated by anti-TNF blockbusters like Enbrel and Humira, and a new crop of antibody therapies is on the horizon with the potential to change the market. But each of those is an injected therapy, and Lilly believes an oral treatment like HM71224 could provide a valuable alternative.

"Significant unmet medical need exists in many prevalent autoimmune diseases where individual patient needs are not adequately being met with available treatments," Lilly Senior Vice President Thomas Bumol said in a statement. "Lilly is committed to changing patient expectations in some of the world's most debilitating disease areas, and we're building a portfolio of potential advances in immunology through our own research and key collaborations such as with Hanmi."

Lilly's autoimmune pipeline includes the Incyte ($INCY)-partnered baricitinib, now in Phase III against rheumatoid arthritis, and the late-stage ixekizumab, which is among the incoming antibodies poised to change the psoriasis landscape.

- read the statement

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