[Updated: 07/02/10 at 10:14 am Eastern time] It appears to be a rare case of fast money made in a biotech startup. The drug giant Eli Lilly (NYSE:LLY) has bought Cambridge, MA-based Alnara Pharmaceuticals and its lead drug for cystic fibrosis patients just two years after the biotech startup incorporated. The companies revealed the deal this morning.
Indianapolis-based Eli Lilly isn’t yet disclosing how much it paid for Alnara, so it’s unclear how well the startup’s elite group of biotech investors are doing in this deal. But read between the lines. Alnara applied to the FDA for approval of its enzyme supplement liprotamase for patients with cystic fibrosis and other conditions in which the pancreas fails to produce enough enzymes to break down foods. Alnara officials have said they hope to have the drug on the market by as early as late this year. Lilly is among multiple drug powerhouses that are in a position to pay a premium to acquire firms that bring new products into their pipelines.
If the FDA approves liprotamase, Lilly will likely have a small but dedicated following for the product among CF patients. Cystic fibrosis, which causes lethal lung infections and digestive problems, affects about 30,000 Americans. Liprotamase, a pancreatic enzyme supplement made in a microbial process, will be offered as an alternative to existing products made with pig enzymes. Bob Gallotto, Alnara’s chief business officer, has estimated that the U.S. market for such supplements is about $400 million annually.
This deal is likely good news for Alnara’s investors, which have pumped $55 million into the startup in two rounds of venture capital financing, including a $35 million round announced early this year. The company’s venture investors include Bessemer Venture Partners, Frazier Healthcare Ventures, Longwood Founders Fund, MPM Capital, and Third Rock Ventures.
“Our agreement with Lilly is an important development as we move liprotamase through FDA regulatory review,” Alexey Margolin, Alnara’s chief executive and co-founder, said in as statement. “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.”
Alnara and Lilly haven’t officially closed this buyout deal, but for now Alnara is continuing to operate in Cambridge as it pursues market approval of liprotamase, Margolin said in an interview this morning. He and Gallotto declined to discuss any terms of their agreement with their buyer, but Margolin said that “it’s a good deal for everyone.” [Editor’s note: This paragraph was added to the initial version of this story that was published this morning.]
Lilly’s buyout of Alnara is more proof that Big Pharma companies want in to the genetic diseases market.
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