Lilly makes $300M deal for Philadelphia drug company

Eli Lilly and Co. has agreed to pay $300 million to acquire the maker of an experimental imaging agent that could help identify patients with Alzheimer's disease, the companies announced Monday morning.

The closely held company, Philadelphia-based Avid Radiopharmaceuticals Inc., is developing an agent that would identify amyloid plaque in the brain. The leading theory about Alzheimer's is that amyloid proteins build up into plaques, disrupting brain functions and leading to the memory loss characteristic of the disease.

Avid's imaging agent, called florbetapir, is currently in Phase 3 clinical trials, and Lilly officials said they see the agent as a good revenue generator in its own right, as nearly every major pharmaceutical company and many academic researchers are chasing advances in the currently untreatable disease.

Lilly Ventures, the venture capital arm of Lilly, has held a stake in Avid since 2005. And since 2007, the two companies have been collaborating on clinical trials of Lilly drugs.

Indianapolis-based Lilly has an experimental drug, solanezumab, in Phase 3 trials that aims to draw amyloid proteins away from the brain by binding to it in the bloodstream.

According to the acquisition agreement, Lilly could pay as much as $500 million more to Avid shareholders if florbetapir reaches the market and achieves certain commercial goals.

Early detection is critical for any drug to have a chance of halting or reversing the impacts of the disease. That's where Avid's imaging compound could help.

A successful treatment for Alzheimer's could achieve more than $5 billion a year in sales, according to Wall Street analysts.

"The acquisition of Avid Radiopharmaceuticals aligns well with Lilly's innovation-based strategy, offers a potential near-term revenue opportunity, leverages our neuroscience expertise and will immediately bolster our diagnostics capabilities," said Lilly CEO John Lechleiter in a prepared statement.

Lilly needs new sources of revenue because beginning this month and running till 2013, it will lose U.S. patent protection on drugs that account for nearly half its annual sales.