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Drug Giant Eli Lilly Buys Alnara Pharma To Get Cystic Fibrosis Drug

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rare disease research center in Cambridge, and in December the company agreed to pay $60 million upfront and up to $55 million in future fees to license an experimental drug for the rare genetic disorder Gaucher’s disease from Israel-based Protalix Biotherapeutics. British drugmaker GlaxoSmithKline (NYSE:GSK) has a collaboration with Carlsbad, CA-based Isis Pharmaceuticals worth up to $1.5 billion to discover drugs for rare diseases and other ailments.

These companies are muscling in on Cambridge-based biotech powerhouse Genzyme (NASDAQ:GENZ). The firm, which took in $793 million from 2009 sales of its top-selling genetic disease drug imiglucerase (Cerezyme), has shown that insurance companies are willing to pay hundreds of thousands of dollars per patient for such treatments. And U.S. healthcare reform offered up special protections for companies that develop innovative new medicines for rare diseases, potentially mitigating the risk these companies face from cheap generic competition.

Lilly talked to Xconomy back in April about its interest in the genetic disease market.

“It’s almost unanimous that all the Big Pharmas are paying much more attention to rare diseases than they have in the past,” said Mark Miller, Lilly’s vice president of corporate development, at the time. “I think people look at the Genzyme model and think that that is a reasonable model to try to emulate.”

The Alnara buyout is another victory for the elite biotech veterans who founded the company. Rich Aldrich, the startup’s chairman and co-founder, is a veteran biotech investor who made millions of dollars as an early executive and shareholder at Cambridge-based Vertex Pharmaceuticals (NASDAQ:VRTX). And Christoph Westphal, another Alnara co-founder and director, was a founder and chief executive at Sirtris Pharmaceuticals, the Cambridge biotech that Glaxo bought for $720 million in 2008. Westphal is now president of SR One, Glaxo’s venture fund. He and Aldrich, who also co-founded Sirtris, have also formed Longwood Founders Fund in Boston to hatch and invest in more biotech startups still.

Like many successful startups, Alnara has benefited from fortunate timing as well as talented management. The company launched in late 2008 with a $20 million Series A round of funding to pioneer new protein drugs, which are typically injected, that patients can swallow. Alnara develops protein drugs that go straight to the gut and aren’t intended to travel further into the body like protein therapies that are injected into patients. Margolin, who was previously developing similar technology as chief scientist at the former biotech Altus Pharmaceuticals, took the helm as Alnara’s founding CEO. Though Altus ultimately went broke, Margolin’s efforts at the defunct Waltham, MA, biotech have paid dividends for he and his associates at Alnara. [Editor’s note: This paragraph was updated with additional details about Alnara’s technology.]

Altus was the original developer of Alnara’s top drug, liprotamase, which is a recombinant microbial enzyme that enables cystic fibrosis patients to metabolize fats, proteins, and carbohydrates that they would otherwise have difficulty digesting. But hard times prompted Altus to cede its rights to liprotamase to the Cytic Fibrosis Foundation, the Bethesda, MD, disease group that had funded its development, in January 2009. And Alnara, just months removed from its $20 million first-round financing, was in a position to strike a licensing deal with the CF Foundation in March 2009 that gave it rights to the late-stage clinical candidate.

Two years and sold is an unusually stellar outcome for a biotech startup. For those biotechs that succeed in getting bought, most of them take way more than two years before buyers come knocking. Many more never get the call like Alnara has.

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  • Thelma Seymour-Smith

    Is this GOOD news for people with Cystic Fibrosis?

  • Zyprexa can cause pancreatitis

    Lilly acquired a treatment for “specific pancreatic disorders”.Lilly’s mainstay drug Zyprexa can and has caused “specific pancreatic disorders”.

    Lilly just collaborated with Walmart on sales of Insulin.Lets not overlook that Lilly’s number one sale is Zyprexa which has a side effect liability for *causing* diabetes and pancreatitis and has resulted in damage settlements.Think about this ‘conflict of interest’ profit on the diabetes aggravated by another company drug Zyprexa.
    Lilly makes billions on diabetes treatment and care and they pleaded guilty to fraud in promoting Zyprexa for causing the diabetes in the first place.

    Zyprexa has generated a lot of bad press for Eli Lilly and they still have unresolved Zyprexa settlement claims.

    Daniel Haszard Zyprexa patient who got diabetes from it.

  • anonymous

    You know why it only took Alnara two years? Because they stole the idea and all the technology from Altus when it went under. Margolin used to work for Altus and so did a bunch of Alnara’s scientists. Check it out!