JPM18: No mega-deals for Lilly, Ricks says
- Despite expecting a benefit from the recent changes to the tax code, Eli Lilly & Co. CEO Dave Ricks told investors at the J.P. Morgan Healthcare Conference in San Francisco that there are no plans to do mammoth deals.
- Still, the company is actively looking at business development opportunities and held over 600 meetings during the week of the conference.
- Darren Carroll, a SVP on Lilly’s BD team, told BioPharma Dive the company is limiting its deal talk to its five core areas — oncology, immunology, diabetes, neurodegenerative, and pain — and is mostly looking at Phase 1 and 2 assets.
“We’re looking for opportunities where we add a lot of value. We can help identify great science, but also add a lot of value as well,” Carroll said, of the rationale behind focusing largely on early-stage assets.
Lilly is also particularly keen in trying to identify those assets either first-in-class or best-in-class.
“The good news is ... all the investments that we’ve seen in science across the whole system – all the venture capitalists, the NIH, the pharma companies, and the long march on the human genome. We think we’re really in an unprecedented era. We’re seeing a variety of companies, a depth and quality to the companies than I’ve ever seen,” added Carroll.
The business development exec said he’s not just seeing this depth and quality in oncology, but across the spectrum of therapeutic areas.
Like many of its big pharma peers, Lilly went through a rough patch in the mid-2000s when many of its best-selling drugs began to lose patent protection. The company has always referred to this as its ‘YZ years.’
During that time, Lilly shied away from M&A deals around drugs and instead poured its capital into its animal health business Elanco.
That unit helped sustain the Indianapolis pharma when the pharmaceutical side struggled.
Now is Lilly is exploring strategic options for Elanco and expects to announce the conclusion of a review in 2019.
Ricks explained the rationale during a 'fireside chat' at the conference, noting both Lilly and Elanco have grown to where they no longer need to rely on each other for sustainability.
Carroll noted that after the YZ Years had come to a close, Lilly began making more investments in the pharmaceutical side of the business and is now seeing many of those investments start to pan out.
“We’re not in a position where we have to go out and make deals. We’re not desperate for anything. After years of investment, we’re seeing opportunities pay off,” he said, noting that complimentary opportunities are particularly attractive right now.
Lilly expects several catalysts over the next year. Of particular importance will be the migraine therapy now under review. The CGRP class has been closely watched and already has a number of companies competing to be first-to-market in the space.
Ricks predicated during a Q&A breakout session at the conference that he doesn’t expect the CGRPs to face a similar fate as the PCSK9 class of cholesterol drugs, which were considered hot new drugs until hitting the market and have since flopped commercially.
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