Lilly's CEO keeps faith in the pipeline as biotech gets 'too expensive'

Eli Lilly CEO John Lechleiter

Eli Lilly ($LLY) is staking its future on a pair of high-stakes Phase III programs, shying away from any big biotech buyouts as sticker prices continue to soar.

CEO John Lechleiter, guest hosting CNBC's Squawk Box on Friday, pointed to Lilly's major bets in Alzheimer's and cardiovascular diseases as the pillars of the company's pipeline. Solanezumab, a twice-failed antibody for Alzheimer's, is on track to wrap up a sizable Phase III do-over late next year, and management is hoping some tweaks to the patient population can reverse the treatment's fortunes. And evacetrapib, a cardio drug designed to boost so-called good cholesterol, is about a year away from reading out make-or-break Phase III data of its own, Lechleiter said.

"The mechanism involved is one that we hope will result in good long-term outcomes for patients, so that means fewer heart attacks, fewer hospitalizations, etc.," Lechleiter said of evacetrapib's potential. "That's what we're trying to prove in this study. That's why it takes so long to do this trial--and so many patients."

But neither project is by any means a sure bet. Evacetrapib, which works by blocking a protein called CETP, is moving forward under the shadow of similar treatments from Roche ($RHHBY) and Pfizer ($PFE) that ran into serious safety issues in late-stage development. And solanezumab, beyond having two Phase III failures already on the books, is working against the long, dismal record of drug R&D in Alzheimer's, at once the industry's toughest field and a disease whose basic biology remains the subject of debate among neuroscientists.

But where some of Lilly's contemporaries might look to a high-dollar acquisition to bring in more late-stage assets, Lechleiter remains wary of overpaying for risky propositions. The ongoing biotech boom has lifted valuations for small and mid-sized drug developers ever higher, and "a lot of these properties are too expensive for my taste," Lechleiter said.

The CEO aired much the same caution on a call with analysts last month, citing "a bit of a bubble" in biotech and saying Lilly isn't planning to ensnare itself in any bidding wars. His counterpart at Roche, Severin Schwan, has echoed that sentiment, saying in July that the Swiss drugmaker has turned down a number of deals because the market price for new therapies has simply gotten too high.

- watch the segment