Lilly acquisition blossoms

Company to pay as much as $380 million for Alnara

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INDIANAPOLIS—Eli Lilly and Co. has acquired Alnara, a privately held biotechnology company developing protein therapeutics for the treatment of metabolic diseases.

The transaction, first announced on July 2, has received the approval of Alnara stockholders and clearance under the Hart-Scott-Rodino Antitrust Improvements Act. All other closing conditions have also been met, according to Lilly.

Lilly paid $180 million for Alnara and could pay up to $200 million more if Alnara's products reach the market and achieve sales targets. The impact of the acquisition will be reflected in Lilly's third-quarter 2010 financial statements.

Alnara was co-founded in 2008 and is based in Cambridge, Mass. An attraction for Lilly is Alnara's lead product in development: Liprotamase, a non-porcine pancreatic enzyme replacement therapy (PERT). Liprotamase is under review by the U.S. Food and Drug Administration (FDA) for the treatment of exocrine pancreatic insufficiency (EPI). Causes of EPI include cystic fibrosis, chronic pancreatitis, pancreatectomy and other conditions.

Patients with pancreatic insufficiency cannot properly digest and absorb fat, protein and carbohydrates—preventing adequate nutrient absorption. PERT is a treatment involving the administration of three pancreatic enzymes. EPI is often associated with cystic fibrosis, a life-threatening genetic disorder.

Cystic fibrosis affects approximately 30,000 children and adults in the United States and nearly 100,000 people worldwide. Approximately 90 percent of cystic fibrosis patients receive pancreatic enzyme replacement therapy to improve nutritional status and bowel-related symptoms related to pancreatic insufficiency.

Bryce Carmine, executive vice president of Lilly and president of Lilly BioMedicines, points out that the acquisition of Alnara provides Lilly with a promising entry into enzyme replacement therapy—an area with unmet medical needs as well as opportunities for novel compounds that give patients additional treatment options.

"Alnara has been very successful in the development of liprotamase—as indicated by its recent submission to the FDA—and we look forward to partnering with Alnara's experts during the regulatory review process," he says.

According to Alexey Margolin, chief executive officer of Alnara, the agreement with Lilly is "an important development as we move liprotamase through FDA regulatory review."

"Lilly's deep expertise in the U.S. pharmaceutical business, including regulatory affairs and the development of innovative compounds that address unmet medical needs, created a natural fit and could allow for opportunities in markets beyond cystic fibrosis," Margolin adds. "We look forward to working together on next steps to bring liprotamase to patients."

If approved, liprotamase will allow many patients to use significantly fewer pills compared to current treatment options. Treatments in the PERT class reduce malabsorption and enhance nutrition in patients with EPI. Because it is not derived from a porcine source, liprotamase could provide the added benefit for patients of reduction in the risk of viral exposure. A pediatric formulation of liprotamase also is in development.

The acquisition also may help cure some other potential issues for Lilly, which is facing expiring patents, and is apparently looking to soften the blow by advancing experimental drugs in its research pipeline and striking acquisition and license deals to bring new products into its portfolio.

"I think the market is exquisitely focused on the progression of our pipeline," Lilly CEO John Lechleiter said in a statement. "They see the impending patent expirations up ahead. They know we've got be successful moving molecules through our pipeline. We're confident we can."

Lilly also reported a 16 percent increase in second-quarter profit, with price increases in the United States offsetting pricing pressures abroad. The results exceeded Wall Street expectations and the company raised its full-year 2010 earnings expectations.

Lechleiter said in the statement that Lilly continued to deliver solid financial results in the second quarter, driven by volume-based revenue gains and ongoing cost-containment efforts that resulted in double-digit earnings growth.

"We're pleased with these results and the opportunities they create," he says. "This strong financial performance enables us to fund our R&D pipeline of nearly 70 clinical-stage assets and make strategic acquisitions in order to deliver an increased number of innovative medicines to patients in the future."

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