US-based drugs company Eli Lilly’s first acquisition of one of its corporate venturing unit’s portfolio companies was one of the biggest exits to a trade buyer in the healthcare sector over the past 12 months.
Lilly will pay up to $800m for Avid Radiopharmaceuticals – $300m initially and a further $500m depending on the performance of Avid’s Florbetapir F18, which has the potential to help treat Alzheimer’s disease.
The heavy weighting to payment by performance fees rather than upfront cash reflects the recent trend but is not so common in so-called big exits of more than $100m.
However, Avid was in relatively advanced stages of regulatory approval and that promise led to a higher fee, along with Avid also providing Lilly with a technology platform for drug discovery in other areas.
John Lechleiter, executive chairman at Lilly, said: "The acquisition of Avid Radiopharmaceuticals aligns well with Lilly’s innovation-based strategy, offers a potential nearterm revenue opportunity, leverages our neuroscience expertise and will immediately bolster our diagnostics capabilities."
Darren Carroll , vice-president of corporate business development at Eli Lilly and the head of corporate venturing units Lily Ventures and Lilly Asian Ventures, said: "Avid is the first acquisition by Eli Lilly of a Lilly Ventures portfolio company. Our equity ownership in Avid was not our only relationship with the company, however. Avid was, and remains, an important collaborator in Lilly’s clinical development of new potential therapies for Alzheimers’ disease.
"The Avid acquisition plays to our neuroscience strengths, potentially provides a significant source of revenue, and offers a diagnostic platform for further development in neuroscience and diabetes.
"Most important, Avid’s lead molecule in development, AV-45, may provide a much needed source of diagnostic information for Alzheimers’ patients and their caregivers."
Avid’s other backers are corporate venturing units from medical device maker Safeguard Scientifics and drug company Pfizer, mutual fund manager AllianceBernstein, venture capital firms Osage University Partners, RK Ventures and Alta Partners, and a Pennsylvania state innovation fund called BioAdvance.
In May last year, Avid closed its series D round at $34.5m, while its $26m series C round closed two years earlier. Its first institutional round of funding was $8.9m in January 2006. Barclays Capital advised Lilly, while Morgan Stanley aided Avid on the deal.