Lilly swoops on Dermira to claim Dupixent rival

Eli Lilly agreed on Friday to buy dermatology specialist Dermira for $1.1 billion and its lead drug, a competitor to Sanofi and Regeneron’s atopic dermatitis Dupixent.

The first major biopharma deal of 2020 – due to close before the first quarter is ended – will see Lilly pay $18.75 per share for Dermira, a 2% premium to its closing price the day before the takeover was announced but a sharp increase on its recent trading levels.

Lilly’s interest in Dermira lies mainly with interleukin-13 inhibitor lebrikizumab, which is in a pair of phase 3 trials in adult and adolescent patients with moderate-to-severe atopic dermatitis, after positive results in two phase 2b trials.

It’s also planning a third trial in combination with topical corticosteroids with readouts from all three studies due in 2021.

The acquisition also gives Lilly one marketed drug – Qbrexza (glycopyrronium) – which is a medicated dressing used to treat excessive underarm sweating or hyperhidrosis. Launched just over a year ago, sales of Qbrexza were $10 million in the third quarter, up 27% on the second quarter.

Lilly represents yet another change of owner for lebrikizumab, which was originated by Roche and was once considered one of the top prospects in its pipeline before the company opted to sell it to Dermira.

Roche divested the drug in 2017 after mixed results in asthma, its first targeted indication, in a deal valued at up to $1.4 billion including $80 million upfront. For Dermira, the acquisition plugged a pipeline hole left by the failure of its acne therapy olumacostat glasaretil in late-stage trials.

If the results from the phase 3 programme are positive lebrikizumab could be a challenger to IL-4 and IL-13 inhibitor Dupixent, which achieved blockbuster sales in atopic dermatitis in 2018, its first full-year on the market.

The product is still accelerating thanks to additional approvals in severe asthma and severe chronic rhinosinusitis with nasal polyposis, and Sanofi recorded sales of just under $1.4 billion for the drug in the first nine months of 2019.

The atopic dermatitis is however starting to look a little crowded in the late-stage pipeline, with Leo Pharma’s IL-13 inhibitor tralokinumab hitting the mark in its phase 3 programme towards the end of last year.

Meanwhile, oral JAK inhibitors like AbbVie's Rinvoq (upadacitinib) – already approved for rheumatoid arthritis – and Pfizer’s abrocitinib have also shown efficacy in phase 3 trials. Lilly has also been testing its JAK inhibitor for arthritis Olumiant (baricitinib) in atopic dermatitis but that drug has been weighed down by safety issues.

Dermira’s chief development officer Luis Pena said recently he reckons lebrikizumab will be a strong rival to Dupixent thanks to its “broad efficacy, safety, and ease of use,” including once-monthly rather than biweekly injections for Sanofi and Regeneron's drug.

The Dermira acquisition bucks something of a trend at Lilly of focusing its M&A activity in the oncology area.

Its largest deal last year was the $8 billion takeover of Loxo Oncology and its RET inhibitor selpercatinib, but it also acquired Armo Biosciences for $1.6 billion – adding pegilodecakin for solid tumours – and signed a $575 million partnership with AurKa for an Aurora kinase A inhibitor currently in phase 1 during 2019. It did however spend $1 billion licensing a non-opioid painkiller from Centrexion last May.