Eli Lilly CEO John Lechleiter on Tackling the Pharmaceutical R&D Crisis (Part 2)

11/22/11Follow @xconomy

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a lot of work within Lilly studying what is the best way to design a study to make sure you’re getting a valid signal. But there’s no question that any time you’re studying a medicine for a mental health or psychiatric indication, you’re likely to get a placebo effect and you have to plan the study very carefully to be sure the data you get out is meaningful. These studies are certainly more hard to do than a study of a new anti-hypertensive, let’s say. But it’s an important field, and we have to continue to advance.

X: David Steinberg of PureTech Ventures asks, what was the math on the $300 million upfront for a PET tracer (Avid) and is it paying off? Any more like that on the horizon?

JL: Avid was one of the first companies our venture capital arm invested in. We had a view of Avid based on being an early investor. We also use the product, PET imaging ligand, in a couple of our late-stage studies for Alzheimer’s. This was used in Semagacestat, the Phase III Alzheimer’s program we discontinued, and solanezumab, which is still in Phase III. Our belief is this could be an important product for the field. It is a bit outside Lilly’s traditional therapeutic wheelhouse. We feel the price we paid was worth it, and it’s still a good investment. Obviously, we have not yet gotten it across the finish line, for approval with the FDA, but we are working to get that done.

X: Derek Lowe of In the Pipeline asks, what are your plans for “insourcing” chemistry? This has something to do with the arrangement you have with AMRI where some chemists who formerly were with Lilly are now working there, through an outsourcing operation that is close by.

JL: We are doing some insourcing of chemistry. What I’m most familiar with is some insourcing of chemistry at our labs in the U.K. We will be considering doing some of that in the U.S. I’m not completely current with that. But it goes back to what I said earlier. Over the past decade, Lilly and the industry have shifted from a monolithic model where we do everything, to start using the resources, brainpower, talent of others in various ways, including insourcing and partnering to get work done more efficiently and effectively.

X: Jonathan Mandelbaum, a scientist in Boston, asks for update on the open innovation platform. Any drugs successfully in-licensed?

JL: I’m not entirely sure what he’s referring to. We announced our Mirror Portfolio. We have two of these with external investors, where we are taking Lilly innovation and external innovation and putting it together into a preclinical development engine. The goal is to get those innovations into the clinic and do the necessary proof of concept studies in the clinic. And Lilly has the right to buy back the innovation from the investors. If that’s what he’s referring to, it’s too early to say how it’s doing.

The other thing he might be referring to is what we used to call PD2. This is something we launched 2-3 years ago, where we sign contracts with biotechs and academic institutions to screen molecules for them. We give them screening results, and it remains their property. There’s no charge for this. The only thing we ask is that if there is something of interest that comes from it, we have right of first negotiation. But if the negotiation can’t be completed, it’s their intellectual property to use as they see fit, for publication or other licensing opportunities. Several hundred institutions have contracted with us to do this, including many top academic institutions and biotech companies, as well as foreign institutions. We’ve just amped that up. That’s probably what he’s talking about. So far, and it’s been several years since we started it, but so far, we have two agreements we have signed with two institutions to take one molecule or a series of molecules into further development.

It’s a long-term play, long-term investment. It puts our toe in the water on more of an open-innovation platform. One of the interesting questions we ask ourselves is how can we take advantage of the Internet and electronic communications, how can we operate more effectively in a virtual world, instead of a brick-and-mortar world, to collect ideas and amass capital and solve some of these problems?

We started a company called InnoCentive in Andover, MA, which is sort of the eBay of science and engineering. In other words, you put a question out there and pay for the best solution. Whether it’s a chemical synthesis problem or an engineering calculation problem. That’s only one channel. We’ve since sold that company. But it’s one approach to a more virtual, multi-platform approach to innovation.

X: Last thing: One commentator (Adam Feuerstein of TheStreet.com) said I should tell you to resign. But another, John LaMattina, who used to run R&D at Pfizer, followed up and said “Ouch, this guy is trying to move Lilly forward by focusing on R&D. It’s unique among current pharma CEOs.”

JL: I have no plans to resign. You can quote me on that.

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