Greenwood-based Elona Biotechnologies Inc., which has been trying to bring a generic version of insulin to market, is running out of cash and struggling to find new investors.
The company told Greenwood officials of its financial troubles last week, according to the Daily Journal newspaper in Franklin. That information prompted the Greenwood Redevelopment Commission to vote Friday to declare Elona in default on $8.4 million worth of economic development incentives the city gave the company in 2010.
The city loaned $6.4 million to help Elona build a new 50,000-square-foot, $28 million insulin production plant in Greenwood and hire 70 workers. The city also gave Elona $1.5 million to help it win approval for its insulin from the U.S. Food and Drug Administration and $500,000 for equipment.
Elona was seen as a rising star, and Gov. Mike Pence even visited the company in March 2012 as part of his “jobs tour,” which was a key element of his gubernatorial campaign.
Elona, which was founded by a former Eli Lilly and Co. scientist, has made its business doing contract drug manufacturing for other firms.
But its growth plans hinged on making a generic version of insulin, something that was not allowed in the United States until the 2010 passage of the Patient Protection & Affordable Care Act.
That law called for a pathway for “biosimilar” versions of biotech drugs, including insulin. As it stands now, a drug such as Lilly’s Humulin insulin faces no generic competition even though its patent expired in 2001.
One problem for Elona has been that making generic versions of biotech drugs will be much more complicated—and much more expensive—than it is for making generic versions of chemical drugs.
Nearly a year ago, the FDA issued draft guidance on “biosimilar” drugs that indicated it would require additional clinical trials of a biosimilar drug. That means a company like Elona would have to spend significant money to test its drug in patients before the FDA would declare it similar to an existing insulin.
Because of that high standard, which the FDA has yet to finalize and put into effect, most pharmaceutical analysts do not expect Lilly and other makers of branded insulins to see their sales decline even after patent expiration.
For example, Lilly will see its U.S. patents on its insulin Humalog expire in 2014. But most analysts predict sales of the drug will keep growing after that time.
Calls to Elona’s founders Ron and Donna Zimmerman were not returned Tuesday morning. A call to Wendy Brewer, who is representing the Greenwood Redevelopment Commission, was not immediately returned Tuesday.