Lilly buys a near-billion dollars worth company and gets its prospective migraine drug back

Eli Lilly has bought a biotech company focusing on pain management, CoLucid Pharmaceuticals for approximately $960 million, ($46.50 per share) and it got back its former migraine drug, which was in the meantime developed and had gotten positive results in a phase 3 study. 

This all-cash transaction will strengthen Lilly’s pain management portfolio for migraine, while adding a potential near-term launch to its late-stage pipeline, Lilly said in its press release.

This purchase will get migraine treatment Lasmiditan back to Lilly. It was out-licensed to CoLucid in 2005 because pain management was not in Lilly’s focus. Meanwhile, CoLucid has developed Lasmiditan, and brought its commercialization closer. In CoLucid’s hands, the drug has shown first positive Phase 3 trial, and the U.S. commercialization could start in 2018 if the second phase 3 trial turns out to be positive.

CoLucid has completed the first of two pivotal Phase 3 trials of Lasmiditan. A data read-out for the second Phase 3 trial, SPARTAN, is expected in the second half of 2017. If this trial is positive, submission of Lasmiditan for U.S. regulatory approval could happen in 2018.

Lilly has put some effort to research migraine treatments itself, but it didn’t waste the chance to buy its own potential selling product back. If approved, Lasmiditan would be a first-in-class therapy to treat migraine through a novel mechanism of action without vasoconstriction.

Lilly’s pain management pipeline also includes galcanezumab, a potential migraine drug in Phase 3 study, and tanezumab, which is still being tested together with Pfizer. Tanezumab is a drug for multiple pain indications, including osteoarthritis, lower back and cancer pain.

“Lasmiditan is a novel, first-in-class molecule that could represent the first significant innovation for the acute treatment of migraine in more than 20 years, and CoLucid has made significant progress in advancing this potential medicine,” said David A. Ricks, Lilly’s president and chief executive officer. “This innovation, along with galcanezumab, could offer important options for the millions of patients suffering from migraine.”

Lilly will buy all CoLucid’s shares, and the deal should conclude by the end of the first quarter of 2017, subject to the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.

While the financial charge will not be finalized until after completion of the acquisition, Lilly is expecting to recognize a financial charge of approximately $850 million (no tax benefit), or approximately $0.80 per share, as an acquired in-process research and development charge to earnings in the first quarter of 2017.

Lilly’s reported earnings per share guidance in 2017 is expected to be reduced by the amount of the charge, the company said.