Eli Lilly may have dealt a migraine drug called lasmiditan to CoLucid Pharmaceuticals 12 years ago, but the Indianapolis giant has clearly kept an eye on it, and now wants more than just some royalties if the treatment succeeds in clinical testing this year.
Lilly (NYSE: LLY) will acquire Cambridge, MA-based CoLucid (NASDAQ: CLCD) in an all-cash deal worth $960 million, or $46.50 per share, a roughly 32 percent premium to the company’s $34.90 closing price. The deal should close by the end of the first quarter. CoLucid went public at $10 per share in May 2015.
The buyout gives Lilly a drug, lasmiditan, currently in Phase 3 testing. The drug is meant to be an alternative both for migraine patients who have heart problems or don’t respond to treatment with standard of care triptans, and Lilly is well familiar with it. Back in 2005, when Durham, NC, venture firm Pappas Ventures formed CoLucid, the company licensed the drug from Lilly and took it through clinical testing.
Lilly already would have shared in lasmiditan’s success—regulatory filings show the Indianapolis firm would have gotten $32 million upon FDA approval of the drug and royalties on sales. Clearly it wanted more. Lilly used a similar tactic on a smaller scale in 2014, when it reacquired a different type of migraine drug originally discovered in its labs by buying privately held startup Arteaus Therapeutics. That drug, galcanezumab, is still in clinical testing.
Now, however, Lilly is making a $960 million gamble that lasmiditan will not just make it to market, but succeed when it gets there. The drug still has to pass the second of two Phase 3 trials in migraine patients—data are expected in the second half of this year. And should it do so and win FDA approval—Lilly could file papers with the FDA in 2018—it could face competition from a new class of drugs meant to actually prevent migraines, rather than repress them when they happen. Amgen (NASDAQ: AMGN) has already filed for approval of the first such drug, erenumab, and others could follow—among them Lilly’s galcanezumab.
Migraines affect roughly 36 million people in the U.S., according to the Migraine Research Foundation, and for the last two decades or so the standard of care has been triptans. These drugs work by constricting blood vessels, however, so they’re not recommended for patients with heart problems. They also lead to various other side effects, such as neck or chest tightness. Lasmiditan, by comparison, targets a receptor in the trigeminal nerve that is responsible for sensations in the face. It’s meant to treat acute migraine episodes. The most common side effects tied to lasmiditan in its first Phase 3 trial were dizziness, tingling of the skin, drowsiness, and nausea.