A key point is they had 4 tier 1 Pharmas to choose from, so you have to beleive Mgt did what was best for all concerned. This is an exciting stock to be in with all they have done and what their pipeline holds for the future. Again I reiterate before the mkt down turn they were in the 10- 11.00 dollar area on not much that was concrete. If they were worth that then, they will soon be 15.00 in 2010. Patience will be rewarded.
Looks like the LLY pick was a bit of a surprise, as they really don't have an RA franchise, and therefore an RA focused salesforce.
Mgmt came out upfront saying they picked LLY because of deal terms (option to copromote) and pick and choose between 3 different buckets for various 050 inflam indications.
BUT, still how will LLY be able to market such an RA drug with no real RA distribution experience? This requires thousands of RA people! The only mitigating factor, from my viewpoint, is that LLY will have a number of years to work on this. But LLY does NOT have the deep pockets of a PFE or MRK or NVS or Roche. So, that is now a known unknown.
Friedman also indicated a number of times that INCY will get to bring their JAK science expertise to the table and be able to participate fully in the development of 050 and have 50% rep on a joint committee.
My gut tells that that LLY not having a huge RA team that could shunt aside, or suppress, INCY R&D and development staff in the joint effort in a perverse way was seen actually as a plus from the INCY standpoint!
Is this the way shareholders would also see it? I know from speaking with INCY Investor Relations head in the past year+ that INCY staff was always concerned that these big pharma R&D people thought they had the superior answers and would not value INCY scientists as much. So, my guess is that the LLY pick might have, to a significant extent, been driven by the R&D staff not being comfortable on this score with the other large pharma who were competing on this deal. LLY was the least threating and most cooperative? They need INCY more than the other large pharma?
Finally, Friedman/Rich Levy confirmed that the current Phase IIa RA trial is fully recruited, and 3 month results (before unblinding) will come out in April '09.
AND, that neither LLY nor INCY have any idea how the RA Phase IIa trial is doing since it is still double blinded.
Thanks for addressing these points and I think everyone was wondering why the partner was Lilly.
I agree that Lilly likely provided the best deal and was least threatening. Pfizer is blazing the trail with their JAK so Lilly just bought into the game in a very big way. Also, we have a big competitive advantage over Pfizer's candidate in that ours doesn't have to be taken 2x daily.
There are lots of groups with large sales/marketing organizations focused on RA and I suspect that Lilly will make a move to acquire or merge with one of these players if 28050 pans out. It could be a huge blockbuster and a program that Lilly can build around for many years. It sets the stage for Lilly to have a major chip in the massive RA game. Biogen/Idec market a biologic as you know but they would likely love to have a crack at using their sales force for this candidate if it gets to market. Lilly can cut a deal for a sales force with no problem when the time comes. It also sets the stage for Lilly to explore M&A deals with major RA players when the time comes. This for sure makes Lilly's pipeline much more attractive. It's a good deal for both groups and the value will build dramatically with time...especially if Lilly gets in bed with a group with an RA sales force.