Finding ways to fund drug development and commercialization is an ongoing task for the pharmaceutical industry. Although devising financing plans and securing funding is a mainstay function of emerging and smaller biopharmaceutical companies, it also can be a task for larger pharmaceutical companies as they evaluate, prioritize, and fund their pipelines and commercial drugs. A case in point is Eli Lilly, which announced this week that it has signed a deal with private investors to form a new biotechnology company with a focus on hospital-based critical care medicines.
Eli Lilly signed agreements with the private investors Care Capital and NovaQuest Capital to establish BioCritica, a newly formed and privately held biotechnology company. BioCritica will initially focus on the continued US development and commercialization of Xigris (drotrecogin alfa (activated)), Lilly’s drug to treat severe sepsis. As part of a licensing agreement, BioCritica will acquire the US development and commercialization rights to Xigris and also will receive the rights to potentially acquire several critical-care compounds currently in preclinical development at Lilly. The collaboration also includes a supply agreement, a services agreement, and an option for BioCritica to potentially acquire the development and commercialization rights to Xigris outside the US at a later date. In return, Lilly will receive royalties on future US sales of Xigris and also will also receive an equity stake in BioCritica.
The move to establish BioCritica is consistent with Lilly’s strategy of finding alternative mechanisms for select drug-development and commercial projects. Earlier this year, the company reported on Mirror Portfolio, which establishes investment funds for early-stage research. Lilly has committed to invest up to 20% of the capital for these funds, or a total of $150 million. In addition to financial resources, Lilly will offer to out-license molecules to these funds. For its investments of time and capital, Lilly will receive preferential access to molecules managed by the funds. Lilly retains the rights to purchase all molecules licensed from Lilly via the Mirror Portfolio as well as to evaluate and acquire a limited number of externally sourced compounds, all at fair market value.
The Mirror Portfolio will work with Lilly’s Chorus, a small, multidisciplinary drug-development group established by Lilly in 2002 that conducts early-stage development work using a virtual model in an effort to improve time and cost deliverables in drug development from candidate selection to clinical proof-of-concept. Using this approach, Lilly says Chorus has been able to reach decisions about 12 months earlier and at about half the cost of current industry models. To date, Chorus has delivered data on 17 molecules, six of which resulted in positive proof-of-concept clinical data. Lilly “cloned” the original Chorus (now known as Chorus Premier) with the establishment of Chorus Resonance in Indianapolis, Chorus Europe in the United Kingdom, and Vanthys, a joint venture in India. Lilly will make these drug-development groups available to the funds as a fee-for-service offering, although other alternative drug-development organizations may be used.
Mirror Portfolio’s emphasis on early-stage development and Biocritica’s initial focus on a drug that is later in its product life-cycle (Xigris was approved in the US in 20o1) shows the different approaches that pharmaceutical companies can consider in managing their pipelines and commercial portfolios. These mechanisms certainly will not replace traditional research and development or commercial models but demonstrate the increased flexibility and resourcefulness that can be applied for select projects.