Lilly drops $110M to bring cancer compound back in house
- Eli Lilly is bringing a cancer drug it sold off a couple years ago back in house, announcing Monday its acquisition of AurKa Pharma for $110 million upfront.
- The deal gives Lilly renewed access to AK-01, a first-in-class Aurora kinase A inhibitor in early-stage testing for a variety of solid tumor types. Aurora kinases are a small class of enzyme that help regulate cellular division. Research has shown that when these enzymes don't function properly, they can contribute to tumor development.
- In exchange for the upfront payment, Lilly takes ownership of all AurKa Pharma shares. The big pharma also put $465 million worth of regulatory and sales milestones on the line, pending approval of AK-01 in the U.S. and other markets.
Lilly, like many of its peers, has been doubling down in cancer drug development. Earlier this month, the company agreed to spend $1.6 billion to snag Armo BioSciences and its late-stage immuno-oncology asset pegilodecakin, a long-acting form of interleukin (IL)-10. That buy, as well as the acquisition of AurKa Pharma, falls in line with recent dealmaking guidance outlined by Lilly management.
"We anticipate that we will be doing other deals both in the IL space and in other areas in oncology in the future," said Sue Mahony, president of Lilly Oncology, during the company's first quarter earnings call in late April.
The transactions also align with Lilly's larger strategy in oncology. Last summer, the company disclosed that breast cancer drug Verzenio (abemaciclib) and a handful of early- to mid-stage cancer drugs would be the main priorities for oncology R&D moving forward. Lilly also said it would evaluate where it put R&D resources more strictly, and noted that advancing candidates with a first-in-class or best-in-class status was of particular interest.
"The acquisition of AurKa Pharma supports Lilly's external innovation strategy, in which we seek to partner with leading life science venture capital firms in order to identify, support and access promising innovation in areas of unmet medical need," said Darren Carroll, senior vice president of corporate business development at Lilly, in a May 14 statement.
Lilly was the original developer for AK-01, but sold it in 2016 to venture capital firm TVM Capital Group, which then set up AurKa to advance the drug. TVM financed the new company through a seventh fund generation of its life sciences arm.
The drugmaker and venture firm had been avid partners before the AK-01 sale; in 2014, Lilly was one of the cornerstone investors in that seventh fund generation, which raised $201.6 million.
"TVM Life Science Ventures VII is an important part of our risk-sharing strategy as we strive to identify, access and shape innovation in areas of unmet medical need, like neurodegeneration," said Robert Conley, distinguished Lilly scholar, in a June 2016 statement announcing that TVM had established another company, Mediti Pharma, for advancing a Lilly treatment for Alzheimer's disease psychosis.
Lilly didn't disclose how it plans to pay for AurKa, but the company does have less cash at its disposal as of late. Cash and cash equivalents totaled $3.08 billion during the first quarter, down from $6.54 billion during the same period in 2017 — due mostly to share buybacks and paying down debt. Notably, the Indianapolis-based drugmaker intends to pay for Armo BioSciences entirely with cash.
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