Eli Lilly to Reacquire Lasmiditan from CoLucid for $960 Million, 12 Years After Initial $1M Divestiture
On January 19, Eli Lilly announced that it had reached an acquisition agreement with CoLucid to purchase the biotechnology company at $46.50 per share, representing a 33% premium, for a total value of $960 million. The transaction is expected to be completed in the first quarter of 2017. CoLucid is a publicly listed biopharmaceutical company whose core asset is lasmiditan, a 5-HT1F receptor agonist. Last year, this drug met both primary and secondary endpoints in a Phase III clinical trial for migraine involving single-dose administration. Two additional Phase III clinical trials involving multiple doses are currently underway; if successful, the drug could be launched next year. Eli Lilly’s acquisition of CoLucid is primarily driven by lasmiditan, which is in the late stages of development.
Interestingly, Lasmiditan was not discovered by CoLucid but by Eli Lilly. At that time, pain management was not a strategic focus for Eli Lilly. In 2004, CoLucid acquired Lasmiditan from Eli Lilly for $1 million. Over the past 12 years, CoLucid invested $130 million in Lasmiditan, making significant contributions to its research, development, and commercialization. Meanwhile, Eli Lilly restructured its R&D portfolio and began targeting migraine as one of the key areas in its emerging pain therapeutics segment. After wandering for 12 years, Lasmiditan has returned home, delivering substantial returns to CoLucid’s investors. Eli Lilly has strengthened its existing migraine drug portfolio while adding potential to its late-stage pipeline. Undoubtedly, this is a win-win situation for both parties.
Thomas P. Mathers, CEO of CoLucid, stated, “We are delighted that lasmiditan is returning to Eli Lilly, where it was originally discovered, to complete the final Phase III clinical trials and commercialization. We take pride in CoLucid’s contributions to the development of lasmiditan, and we believe that, leveraging its expertise and innovation in pain management, Eli Lilly is best positioned to bring this medication to patients.”
In the field of pain management, Eli Lilly is a dominant player with significant influence and a key competitor in the market for CGRP antibody therapies for migraine prevention. Although its galcanezumab (a potential novel class of CGRP inhibitor for cluster headaches and migraines, currently in Phase III clinical trials) holds a temporary lead, competitors such as Amgen, Teva, and Alder are closely trailing. Additionally, in 2013, Eli Lilly invested $1.8 billion to participate in the Phase III development of Pfizer’s NGF antibody tanezumab, demonstrating its determination to enter the broader analgesic market.
Migraine is one of the most common neurological disorders. According to World Health Organization (WHO) estimates, approximately 10% of the global population has experienced migraines, with 2–4% of individuals suffering from migraine-related disability for more than half of each month. In the United States alone, there are over 36 million migraine patients. Currently, the primary medications used to alleviate migraines are triptans, which are 5-HT analogs. Although these drugs are highly effective, they lack selectivity, are not suitable for long-term use, and are poorly tolerated or contraindicated in many patients due to associated complications. Lasmiditan is a selective 5-HT1F receptor agonist that lacks the 5-HT1B and 5-HT1D activity characteristic of other triptans, thereby potentially offering a better safety profile.
CoLucid has completed the first of two pivotal Phase III clinical trials. Data from the second Phase III trial (SPARTAN) are expected to be released in the second half of 2017. If this clinical study is successful, a marketing application for lasmiditan may be submitted to U.S. regulatory authorities in 2018.
If approved, lasmiditan would become the first-in-class innovative therapy for migraine treatment utilizing a novel mechanism of action. This product would not only benefit migraine patients who are inadequately served by current treatment options, but also offer significant advantages to patients with cardiovascular disease or those at risk of similar conditions.
Nevertheless, the market launch of lasmiditan is unlikely to generate overwhelming demand. It is reported that patents for all tryptamine-based medications have already expired, which will inevitably lead many companies to market generic versions of these drugs. If lasmiditan follows the strategy of pricing as a new drug at a premium (estimated at 50–100 times the price of older medications), its target population may be largely confined to cardiovascular disease patients who are intolerant to tryptamines. Should CGRP inhibitors significantly reduce the incidence of migraine, lasmiditan’s market share could be further squeezed. Experts project that lasmiditan’s sales will reach approximately $500 million by 2022.
Selling products under development has always been a difficult decision for large pharmaceutical companies. When Eli Lilly sold lasmiditan to CoLucid, the sale price was only $1 million. Previously, daptomycin (Cubicin) was also sold for just a few million dollars, at a very low price. For a giant like Eli Lilly, this amount is negligible; however, when these products become blockbusters in the hands of other companies, the decision to sell them often faces scrutiny from various parties. Such scenarios are not uncommon in the biopharmaceutical industry. For instance, Pfizer sold its PARP inhibitor to Clovis Oncology, only to later acquire Medivation at a high premium for a similar drug. Pfizer’s strategic judgment was also questioned when it sold neratinib to Puma Biotechnology.
Another, more significant reason is that it was previously relatively easy to find alternative drugs, and the market was quite receptive to low-cost, low-risk “me-too” drugs. In recent years, however, the difficulty of discovering valuable new drugs has risen sharply, prompting many large pharmaceutical companies to strategically transfer projects they no longer wish to develop to smaller firms. Although the upfront financial returns may not be as substantial as those from direct asset sales, the originating company can still secure certain market rights upon successful commercialization, making this arrangement a favorable option for both buyers and sellers. For example, last year, hedge fund manager Vivek Ramaswamy acquired two investigational drugs from Takeda Pharmaceutical Company at no upfront cost to establish Myovant Sciences; under the agreement, Takeda would regain marketing rights in Asia if the drugs successfully reach the market. Such products have typically undergone extensive optimization and rigorous experimental validation, so shelving them would be a considerable waste. Transferring these assets to enterprises willing to assume development risks represents an effective strategy for maximizing their value.
News Sources: SinoBridge, WuXi AppTec