- Eli Lilly will pay $1.1 billion to acquire the skin disease-focused biotech Dermira, the companies said Friday, in a deal centered around a late-stage atopic dermatitis drug set to challenge one of the industry's biggest blockbusters.
- Dermira recently started a Phase 3 trial for its IL-13 binding monoclonal antibody, lebrikizumab. Several Wall Street analysts have high expectations for that drug since a Phase 2b readout earlier last year, which showed efficacy in line with Sanofi and Regeneron's Dupixent, which inhibits IL-4 and IL-13.
- The deal represents the first significant biopharma acquisition of 2020, and comes days before the J.P. Morgan Healthcare conference is set to kick off. While the deal is priced at an 86% premium to a two-month average of Dermira's share price, the California biotech's stock climbed in recent weeks from $8 to $18. Lilly is paying $18.75 per share, a 2% premium compared to Thursday's closing trading price of $18.34.
Dermira took a bet on lebrikizumab in 2017, licensing the drug from Roche a few months after Dupixent (dupilumab) became the first biologic approved in atopic dermatitis, the common form of eczema.
That deal gave Dermira a path forward after its lead drug candidate, an experimental acne treatment, failed in Phase 2 trials in March 2018. The Menlo Park, California-based biotech's stock subsequently dropped by about two-thirds.
Even with the Lilly takeout, Dermira's stock never recovered to those peak levels but did modestly rebound as lebrikizumab produced positive data.
In Lilly's hands, the biologic will likely accelerate the growth of the atopic dermatitis market if successful in the ongoing Phase 3 study. The healthcare research company Decision Resources has estimated that U.S. market will grow to nearly $15 billion by 2025.
Pharma giants have shown increasing interest in atopic dermatitis. Last month, Johnson & Johnson's Janssen paid $750 million upfront for rights to bermekimab, an anti-IL-1 drug in Phase 2 testing for the skin condition. Other drugs in clinical testing include Leo Pharma's tralokinumab, AbbVie's Rinvoq (upadacitinib) and Pfizer's PF-04945842.
While Lilly had completed Phase 3 testing for its own JAK inhibitor in atopic dermatitis, safety concerns have weighed down that class of medicines. Last month, then-SVB Leerink analyst Pasha Sarraf called Lilly a "top candidate" to acquire Dermira given baricitinib's challenge.
The Indianapolis drugmaker also has an IL-33 inhibitor expected to report Phase 2 data in moderate-to-severe atopic dermatitis sometime this year.
Dermira has stated it believes lebrikizumab can compete with Dupixent on safety, efficacy and convenience.
The Phase 3 program is divided into an induction and maintenance periods. The first 16-week portion will test a biweekly dose against placebo for 16 weeks. Responders will then be re-randomized and split between placebo, biweekly dosing and monthly dosing for an additional 36 weeks.
Dupixent is given as a biweekly injection, so the monthly dosing frequency could give lebrikizumab an advantage on convenience. But Phase 2 data showed the drug's efficacy in line with Dupixent for the biweekly dose but not the monthly frequency.