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Lilly licenses Xigris rights to new biotech firm

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Eli Lilly and Co. has agreed to license the U.S. marketing rights of its slow-selling sepsis drug Xigris to a newly created biotech company that will seek to reinvigorate sales of the medication, the Indianapolis-based drugmaker announced Monday morning.

The new company, BioCritica Inc., will be based in central Indiana and will be jointly owned by Lilly and two private investment firms: New Jersey-based Care Capital LLC and North Carolina-based NovaQuest Capital Management LLC.

The company will be led by David Broecker, who managed Lilly manufacturing operations in Germany and Ireland before becoming CEO of Alkermes Inc., a Massachusetts-based drug development firm.

A “handful” of Lilly employees will leave Lilly to join BioCritica, Broecker said. He expects the company to employ 20 to 25 people by year's end and as many as 70 by 2015.

The deal was structured with help from Indianapolis-based BioCrossroads, a life sciences business development group. Also, the Indiana Economic Development Corp. committed $2.9 million in tax credits and $175,000 in training grants.

BioCritica hopes to be able to do the clinical trial work necessary to develop Xigris for additional uses other than its treatment of severe sepsis in hospital patients. Within Lilly, Xigris was well down the priority list to get time from scientists and other staff.

“It’s a good way for the molecule to get some resources that it might not otherwise be able to get [inside Lilly],” said Lilly spokesman Mark Taylor.

Lilly, which is trying to find new drugs to replace aging blockbusters, has nearly 70 molecules in clinical trials, and is desperately seeking drugs that can produce annual sales of $500 million or more.

Xigris’ low-priority status within Lilly has much to do with its rather paltry sales, which totaled $104 million last year, down 18 percent from the previous year.

Xigris was the first drug Lilly launched after it lost patent protection on its best-seller Prozac in 2001. It is the only drug approved in the United States to fight severe sepsis. Lilly fought a long legal battle over the drug's patent with Massachusetts-based Ariad Pharmaceuticals Inc.

Expectations for the drug were initially huge, with some Wall Street analysts predicting annual sales of $2 billion. But the drug struggled after U.S. regulators approved the drug for a small category of patients, and because hospitals struggled to identify which patients and in which situations the drug was appropriate.

But Broecker hopes a new clinical trial Lilly sponsored, which is scheduled to produce results by year's end, will clear up that confusion.

"We believe if it's favorable, it will allow us to go out and essentially re-energize the marketplace," Broecker said.

BioCritica also plans to license and sell other drugs for use in critical care patients in hospitals.

“We are confident that BioCritica will help realize the full potential for Xigris while working to develop new critical care medicines,” said Lilly CEO John Lechleiter, in a statement.

Lilly did not disclose the financial terms of the deal, nor how much equity it will hold in BioCritica. Tayor said BioCritica will have an option to acquire the international rights to Xigris at a later date.

Taylor said the deal will have minimal impact on Lilly’s work force, since Xigris is manufactured by third-party firms and is sold via a contract sales force. Lilly does and will continue to do the packaging of Xigris.

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  1. The $104K to CRC would go toward debts service on $486M of existing debt they already have from other things outside this project. Keystone buys the bonds for 3.8M from CRC, and CRC in turn pays for the parking and site work, and some time later CRC buys them back (with interest) from the projected annual property tax revenue from the entire TIF district (est. $415K / yr. from just this property, plus more from all the other property in the TIF district), which in theory would be about a 10-year term, give-or-take. CRC is basically betting on the future, that property values will increase, driving up the tax revenue to the limit of the annual increase cap on commercial property (I think that's 3%). It should be noted that Keystone can't print money (unlike the Federal Treasury) so commercial property tax can only come from consumers, in this case the apartment renters and consumers of the goods and services offered by the ground floor retailers, and employees in the form of lower non-mandatory compensation items, such as bonuses, benefits, 401K match, etc.

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