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Eli Lilly Is a Biologics Company

The news from Eli Lilly is not good – they’re laying off 485 people, according to filings with the state, and it appears to be completely a result of their latest Alzheimer’s clinical failures. The positions are largely in the company’s sales and marketing area. According to that article from FiercePharma, the company had been staffing up to get ready to sell solanezumab, but now that no one’s going to be selling it to anyone, well. . .

The biggest thing that they have going in Alzheimer’s now is the collaboration with AstraZeneca on a beta-secretase inhibitor, AZD3293. That trial is ongoing, and is set to wind up in 2019 (I’m not sure if there’s an interim evaluation built in before then). They show another BACE inhibitor in Phase II, and three more antibody programs in Phase I. The company made a very large commitment years ago to go after Alzheimer’s, and has been talking up their chances for success year after year.

And not just in Alzheimer’s. Some readers may recall the (now former) CEO, John Lechleiter, saying in 2010 that the company was going to be producing two drugs a year starting in 2013. That year, they had no approvals. In 2014, they got dulaglutide and ramucirumab (via the Imclone purchase). In 2015, they got approval for necitumumab. And last year, they got ixekizumab and olaratumab. Five approvals instead of eight so far, which is a bit more like the reality we all know – what’s interesting, though, is that there’s not a single small molecule among them. As the names indicate, they’re all antibodies.

The last time Lilly got a new small molecule on the market was in 2009 (Effient/prasugrel). Before that, there was Evista (raloxifene) in 2007, and Cymbalta (duloxetine) in 2004. But at that point, we’re back into the territory where the patents are already expired or expiring (as with both of those). Effient itself is starting to expire later this year, although that’s being fought out in court, as is customary. So if you’ve been thinking of Lilly as a traditional small-molecule drug company, you might have to adjust your setting a bit, because biologics are and will be paying most of the bills over there. Baricitinib looks to be the company’s only patent-protected small molecule drug by the end of the year.

That’s where the whole industry has been going for some years now, though. I don’t have the figures for 2016, but in 2015, 7 out of the top 8 pharma products (by sales) were biologics. A lot of us probably need to adjust our settings a bit in light of figures like that. . .

26 comments on “Eli Lilly Is a Biologics Company”

  1. Petros says:

    The EMA recommended baricitinib for approval at the CHMP’s December meeting, so formal EU approval should be late February. The first small molecule JAK inhibitor approved for RA in Europe but inlicensed from Incyte.

    Not sure the UK R&D site at Windlesham does much with biologicals, think it is still mostly small molecules

  2. Project Osprey says:

    I wonder is that’s safer long term. With small molecules when something leaves patent protection its quickly taken up by generic producers, but antibodies have got to be harder work. That might reduce the number of competitors and keep the price reasonably high… at least until the industry catches up but that could take a far while.

  3. ex-chemist says:

    Beyond scientific rational, there is also a commercial factor that make biologics very attractive. Their patent protection is not as important as it is for small molecule. When a small molecule loses its patent, a legion of generic manufacturer will swamp the market and wipe out 90 % of your profit overnight. Plus the investment to develop a generic is relatively modest (just manufacturing, several millions $).

    On the other hand there are very few player than can produce a biosimilar with a much larger investment to demonstrate comparability (that would involves clinical trial data, $75–$250 million per molecule). The cost of goods will still be high for your competitors, their discount will be limited compare to your own (30 % discount?). So even after you lose your IP protection, your biological drug will still be very profitable (60-70% of profit pre-IP expiration).

    For reason I think the top pharma product by sales will remain Biologics, very likely the same one even after patent expiry.

    1. anonymous says:

      Agreed, but recall that one of the company was asked to run a clinical trial for their biologics (I am thinking Merck, EPO? But, I need some help here) and they backed off. So these companies still have to shell out $$$ for clinical trial for their biologics mimic! But then the pay off like you say is “yuge” even if you had no IP protection.

      1. anonymous2 says:

        I have heard that biologic clinical trials are expensive because of the super long half-lives (30+ days) of these compounds (not metabolized by the liver or filtered by the kidneys), and patients need to be monitored until the drug clears to a low level. Would someone confirm or clarify?

        1. Lora says:

          It really depends on the biologic. Some are very quickly excreted via kidneys, others are kept in circulation. Anything with an Fc on it, or an albumin conjugate, can last well over a week thanks to the neonatal Fc receptor recycling. Immunogenicity may be an issue, which is typically observed ~ 2 weeks after a repeat dose; i.e. it doesn’t show up on the first dose, only the second/third, and the antibody & cytokine response takes a few days to be detectable.

          1. anonymous2 says:

            Very helpful. Thank you.

      2. Me says:

        I’m representing tons of companies bringing biosimilars to market as we speak. I wouldn’t be so sure how hard it is…there are plenty of GMP shops out there that can make biologics. I think the price attrition is not as bad at the moment, but how long will it really take for the rest of the world to get up to speed?

        Will we be having the same discussion about cell therapy in 2027?

        1. ex-chemist says:

          There may be a lot of GMP manufacturing centre but they are going to make biosimilars not generics. They still need to do a clinical trial to demonstrate that their biological drug is comparable with the original. Getting the marketing approval for your biosimilar is the problem. Also because they are considered to be different chemical entities (like a me-too drug really), they are not interchangeable without consent from the user…

          However, your point is taken, maybe in 2027, the picture will be different and perhaps the biologics will lose their hegemony to the cell and gene therapies… 🙂

          1. Me says:

            lol I see your point too – it just means you need a slightly more capitalised business. But believe me, I’m working for plenty of VC-backed biosimilar startups with the $$$ for trials. It’s pretty easy to convince them to pay for the trials when they see that biosimilars demand a higher price than generics.

    2. Anon says:

      I’m being nit-picky, but getting 60-70% of revenue is not the same as getting 60-70% of profit. It’s going to cut into profits much more than that because of all the fixed costs the revenue has to offset first.

      I guess the thing that worries me is most of these aren’t developed in house, and prices for aquisitions are constanatly climbing. Essentially you are running a business model where you bring nothing but money and are constantly waiting for the innovation of others to bail you out.

      1. Andy II says:

        “Essentially you are running a business model where you bring nothing but money and are constantly waiting for the innovation of others to bail you out.”

        I thought that is the business models that MBA’s have been touting/implementing to pharma executives/investors as the only means of maximizing the ROI. No?

        1. Anon says:

          Yeah, I think they are happy to participate in that model, however, I kind of wonder who needs big pharma companies in an enviornment like that? A PE firm could probably do it better.

          1. Anon says:

            It’s kind of like someone who runs marathons saying “wouldn’t it be great to turn this sport to a 100m dash.” It’s an easier race, but there are probably better athletes for a 100m dash.

  4. Electrochemist says:

    FYI, Lilly also launched biosimilar insulin glargine in Dec 2016.

  5. Eric says:

    The commercial appeal of biologics has been apparent for awhile. Biosimilars will bring the cost down somewhat, but it seems unlikely to dramatically reduce prices due to the costs of bringing a biosimilar to market. No biosimilar company will be willing to spend the money if they don’t predict adequate margins once they get to market.

    It seems like the biggest threat to biologics will actually still be small molecules that target the same enzyme/receptor/etc. For example NPlate (biologic) and Promacta (small molecule) both target the TPO receptor and share the market. Eventually Promacta will become generic and one has to guess that will drive sales away from the expensive biologic.

  6. Bernard Munos says:

    The irony here is that Lilly’s leading small molecule candidate, baricitinib, which should reach market later this year, is a major threat to the biologicals dominating the RA market, partly because it has a small molecule cost advantage. (It has also worked very well in trials.) Granted, there will be a patent cliff at some point in the future, but, by then, I’d be surprised if biologicals don’t experience them as well. In other words, the biologicals’ advantage in sustaining sales post patent expiration looks like it might be transient, and the small molecule cost advantage will guarantee them a share of the drug market for many years to come.

  7. CR says:

    Why is this a major threat to biologicals for RA? Tofacitinib has been on the market for a while and that didn’t seem to be a major threat. I believe tofacitinib does have some risk associated with higher doses – also it’s a JAK1/3 vs. JAK1/2 for baricitinib. But it’s not terribly clear as to why baricitinib would be the threat that tofacitinib wasn’t/isn’t – just curious.

  8. steve says:

    It’s much more straightforward to determine side effects with a biologic. If you have an antibody, you can screen every tissue in the body for cross-reactivity using tissue array slides. You can’t do that kind of screening with a small molecule that conceivably could interact with any protein inside or outside of a cell. The difference is in cost – a biologic costs a patient about 20X what a small molecule drug would cost. That’s why any small molecule drug is a potential competitor to a biologic. The trick is finding one that would work as in general they are targeting different molecules. For example, JAK kinases inhibitors are blocking a cell signaling pathway whereas anti-TNF drugs are mopping up a secreted cytokine. The chances for untoward toxicity of a JAK kinase inhibitor may very well block the cost advantages of a small molecule drug.

    The one case I can think of where the targets are similar (though still not the same) are the GLP1 agonists (biologics) vs DPPIV inhibitors (small molecule). There the DPPIV inhibitors dominate the market but they have not eliminated the biologics, though I’m not sure why not. If anyone knows it would be interesting to hear.

    1. tangent says:

      I have to assume biologics’ price of production will tend to fall somewhat with manufacturing technology — how far? What are the inherent lower bounds?

  9. James C. says:

    Spent 7 years doing organic synthesis but went back and got training in chemical biology. I’m glad I know how to do everything from synthesizing compounds to making recombinant proteins, wester blots, and gene knockouts to bioanalytical techniques with mass spec and learning how to simply work with in vivo models.

    Good synthesis jobs are an artifact leftover from the 20th century. The only thing that will be left on US soil in the future will be crappy CRO jobs.

  10. loupgarous says:

    Lilly’s always sold biologics – it was selling insulin from livestock pancreas in the old days, and was a early licensee of Genentech’s recombinant human insulin. Lilly was also one of the first pharma firms to resequence human insulin (first, by reversing lysine and proline in the middle of the molecule) in the quest to conquer insulin resistance (failed) and to create a very bioavailable insulin analog (successfully). Synthetic insulins are probably a big piece of their business (unsure how profitable, but Lilly and Novo Nordisk dominate that market).

    Lilly’s got a huge investment in scientific tools to design biologics, supercomputers and such. It’s a shift from biggest success with a small molecule, fluoxetine (we who worked there called their new high-tech complex in Indianapolics is called “The House that Prozac Built”).

  11. loupgarous says:

    One more try, but in English:
    Lilly’s always sold biologics – it was selling insulin from livestock pancreas in the old days, and was a early licensee of Genentech’s recombinant human insulin. Lilly was also one of the first pharma firms to resequence human insulin (first, by reversing lysine and proline in the middle of the molecule) in the quest to conquer insulin resistance (failed) and to create a very bioavailable insulin analog (successfully). Synthetic insulins are probably a big piece of their business (unsure how profitable, but Lilly and Novo Nordisk dominate that market).

    Lilly’s got a huge investment in scientific tools to design biologics, supercomputers and such. It’s a shift from their biggest success with a small molecule, fluoxetine (we who worked there called their new high-tech complex in Indianapolis “The House that Prozac Built”).

  12. Paramus says:

    Although it seems that Lilly is heading in the biologics direction, they also say they are sacking 200 LRL staff including chemists to make way for molecule-making capabilities, immunology and Alzheimer’s disease! What are molecule-making capabilities if they are not chemists?

    1. loupgarous says:

      I’d bet the new positions will include more high priests and acolytes for Lilly’s supercomputer installations, mostly engaged in molecular modelling and simulations.

  13. April says:

    Eli Lilly is truly coming back Biologics area since 2014, but this year their small molecule Baricitinib is worth to expect. Still need small molecule to support, otherwise it’s too risky.Maybe should do some comparison to Amgen. To see how a 100% biologics performance.

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