Lilly buying developer of pain-management drugs for $960M

Eli Lilly and Co. is jumping aggressively into the market for pain management, buying biotech firm CoLucid Pharmaceuticals for $960 million and getting access to a late-stage experimental drug for migraine headaches.

The Indianapolis-based drugmaker, which has been developing its own drugs for pain, announced the deal Wednesday morning. Lilly will acquire CoLucid for $46.50 a share, a hefty premium over the company's closing price Tuesday of $34.30 a share.

The all-cash deal comes just weeks after Dave Ricks became CEO at Lilly, and shows he is not hesitant to shop for companies that will provide compounds to help beef up Lilly's pipeline, as the company tries to launch dozens of products over the next decade.

CoLucid Pharmaceuticals, based in Cambridge, Massachusetts, is developing an oral migraine treatment called lasmiditan, which has completed the first of two pivotal Phase 3 clinical trials. The companies said they expect to get data from the second trial in the second half of 2017 and, if the results are positive, to submit the drug to the Food and Drug Administration for regulatory approval.

More than 36 million people suffer from migraine headaches in the United States. Lasmiditan, if approved, would be the first medication to attack migraine pain through a novel approach that does not involve constricting blood vessels, the companies said.

Lilly also is developing a separate medication called galcanezumab for cluster headaches, and is collaborating with Pfizer to develop a treatment called tanezumab 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,” Ricks said in a statement. “This innovation, along with galcanezumab, could offer important options for the millions of patients suffering from migraine."

Lasmiditan was discovered at Lilly, but the company licensed it to CoLucid in 2005. Over the past 12 years, CoLucid has taken important steps to decrease the risk related to its development and advance it toward commercialization.

At the time Lilly licensed out lasmiditan, pain management was not a strategic area of focus for the drugmaker. Lilly has since reorganized its research and development efforts to focus on migraine headaches as part of its emerging therapeutic area of pain.

Ricks told IBJ last fall that pain was one of Lilly's key areas for drug development, along with diabetes, cancer and immunotherapy diseases.

“We are excited that lasmiditan will be back at Lilly, where it was originally discovered, for the conclusion of Phase 3 development and potential commercialization,” CoLucid CEO Thomas P. Mathers said in a statement. “We are proud of the work that CoLucid has done to develop lasmiditan, and we believe Lilly’s expertise in pain and commitment to innovation are a natural fit to potentially bring this medicine to patients.”

The transaction is expected to close by the end of the first quarter of 2017, subject to antitrust clearance and other customary closing conditions.

Lilly said it expects to recognize a first-quarter charge of about $850 million, or 80 cents per share, related to the deal. The company’s earnings-per-share guidance in 2017 is expected to be reduced by the amount of the charge.