In January 2017, Eli Lilly acquired US-based specialty company CoLucid for approximately $960m, a 33% premium over CoLucid’s share price. The value of the deal highlights the substantial commercial opportunity afforded to Eli Lilly by gaining CoLucid’s sole pipeline drug lasmiditan, which is currently undergoing Phase III trials.

If approved, lasmiditan would be the first acute treatment for migraine in more than 20 years. Unlike most acute migraine drugs on the market, which are limited by cardiovascular risks, lasmiditan is not a vasoconstrictor. It will address a major unmet need in this market by being able to be administered both to patients with cardiovascular risk factors and those who are dissatisfied with their existing therapies. Its clear product positioning, novel mechanism of action, and promising efficacy and safety will most likely translate into a rapid sales trajectory for lasmiditan.

Another significant driver for this deal is the opportunity for Eli Lilly to boost its pipeline for pain management, an area that has been de-prioritised in the past. CoLucid’s lasmiditan will join Eli Lilly’s galcanezumab, which is currently in Phase III for migraine prevention, and tanezumab, which is being investigated for osteoarthritis, lower back pain, and cancer pain.

Eli Lilly’s acquisition of CoLucid is in line with its externalisation strategy for research and development (R&D), as exemplified by both galcanezumab and tanezumab. Galcanezumab was acquired from Arteaus Therapeutics in 2014, and tanezumab was originally developed by Pfizer before having its co-development rights in-licensed in 2013.

By turning to acquisitions and in-licensing deals, Eli Lilly is aiming to expand its presence in the pain market, a common strategy for rapid entry into a new segment, as it lowers the costs and high risks associated with R&D, especially within neurology.

The acquisition of CoLucid has also happened precisely when Eli Lilly needs to rejuvenate its pipeline to create novel blockbuster drugs in the future. This need is evidenced by Eli Lilly’s tanezumab, which was once considered one of the top prospects in the company’s pipeline before safety risks halted its clinical development for nearly five years.

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Further R&D setbacks have been seen in Eli Lilly’s Alzheimer’s disease pipeline drug solanezumab, which has failed several late-stage trials and is now facing an uncertain future. There was a great deal of hope that solanezumab could have been the first drug to actually slow down the progression of Alzheimer’s disease and ultimately position itself as Eli Lilly’s future blockbuster. However, in light of these setbacks, Eli Lilly’s future neurology presence could rest on lasmiditan and galcanezumab, which target acute and chronic migraine patients, respectively.

If they prove to be successful, Eli Lilly will be able to provide a range of drugs and a more tailored approach to patients, gaining the lion’s share of the lucrative migraine market.