Eli Lilly Acquires SGX Pharmaceuticals for US$64 mil.

Eli Lilly Snaps Up GSX Pharmaceuticals

U.S. pharmaceutical company Eli Lilly has reported that it has signed a definitive merger agreement with California-based biotechnology company SGX Pharmaceuticals for approximately US$64 million, the company noted in a press release. The acquisition is to give Eli Lilly access to SGX's structure-guided drug-discovery platform and FAST fragment-based, protein structure drug-discovery technology in addition to a portfolio of pre-clinical oncology compounds. SGX Pharmaceuticals' drug discovery programme targets MET receptor tyrosine kinase, an enzyme which has been implicated in the aetiology of various types of cancer; BCR-ABL tyrosine kinase enzyme for the treatment of chronic myelogeneous leukaemia (CML) and other protein and enzyme targets, including JAK2, RON, ALK, RAS and IKKe. Commenting on the merger of SGX Pharmaceuticals, Eli Lilly's executive vice president, science and technology, Steven M. Paul, M.D. said, " After a successful collaboration over the past several years, we are excited to bring the scientific and technological expertise of SGX into Lilly's research organisation, while at the same time expanding our presence in the San Diego area," notes the source. Eli Lilly entered an initial collaboration with SGX in 2003, which has enabled it to use its three dimensional x-ray crystallography technology and protein-structure determination technologies

Boost to Eli Lilly's Existing Oncology R&D Portfolio

Lilly's set of experimental cancer drugs so far is a mixture of early-stage molecules and novel formulations of well-known molecules. LY2334737, for example, is an early-stage pro-drug of the firm's older anti-cancer compound Gemzar (gemcitabine), and as such illustrates the importance of this kind of approach to life-cycle management for Lilly. At the same time, there are other more radically novel contenders such as LY573636, which appears to induce apoptosis by a unique mechanism of action. Many of the lead candidates in oncology point to the importance of collaborations with partners such as Isis (LY2181308 and LY2275796); ICOS, which Lilly acquired in 2007 (IC83); and AME, acquired in 2004 (LY2469298; see United States: 16 November 2007: Questions That Matter: What Next for Eli Lilly's Research Pipeline?).

Outlook and Implications

The merger is very good news for both parties. By acquiring SGX Pharmaceuticals, Eli Lilly remains truthful to its core base, namely biotechnology, while strengthening its R&D capabilities, especially in the fields of structural biology, and gaining an exciting new oncology R&D portfolio to complement its own. The company has so far invested heavily in the completion of a new biotechnology R&D Complex (see United States: 13 May 2008: Eli Lilly Completes Biotechnology R&D Complex). Currently, Eli Lilly is the fifth-largest biotechnology company in the world with eight medicines (30% of its drug portfolio) being biotechnology medicines worth approximately US$4.4 billion in 2007 sales (see United States: 30 January 2008: Eli Lilly's Full-Year Results Exceed Expectations). The acquisition agreement with SGX is expected to be finalised in the second half of 2008, contingent on SGX shareholder approval and antitrust clearance.