Lilly hopes new drug delivery R&D center will prove useful in osteoporosis, diabetes arenas

Lilly Research Laboratories President Jan Lundberg

Eli Lilly ($LLY) announced last week that it will be opening a drug delivery and device innovation center in Cambridge, MA, as it seeks to meet the needs of its pipeline, such as a suitable formulation for its osteoporosis candidate, and maintain its leadership position in diabetes, where delivery devices are key.

"New drug delivery and device innovation is critically important to Lilly's growing portfolio of potential medicines, particularly in our focus areas of diabetes, neurodegeneration, immunology and pain. The best therapies of the future will marry breakthrough scientific discovery with customer-friendly devices. That's what will make life better for people who need our medicines and give Lilly a true competitive edge," said Jan Lundberg, president of Lilly Research Laboratories, in a statement.

Construction of the new center will begin immediately. Lilly says it will increase R&D space for drug delivery and devices by 50%. In addition about 30 researchers will be hired, increasing headcount in development of those arenas by 25%.

The company recently downgraded its osteoporosis candidate, blosozumab, from Phase I to Phase II due to difficulty identifying a commercially attractive formulation, according to the most recent earnings call. Company officials previously touted the antisclerostin antibody, saying its effect was twice that of its own Forteo.

In addition, the Lilly is working with AstraZeneca ($AZN) on an oral BACE inhibitor that treats Alzheimer's by cleaving a certain enzyme. History says the program has a low chance of succeeding due to delivery challenges associated with targeting the brain, but the payoff would be enormous. "The chemistry isn't hard. It's a pretty new target. There's lots of different strategies on accessing the target, including several of our own which have failed," said David Ricks, president of Lilly Bio-Medicines, during a healthcare conference in March. The program is in a Phase II/III trial.

On the device side, Lilly is developing a proprietary formulation of Zosano's hormone for osteoporosis that's delivered via a microneedle patch system, instead of a daily injection. The candidate recently moved to Phase II, according to the most recent earnings call.

Lilly most prominent therapeutic area is diabetes, which includes top-seller Humalog and its associated pens for convenient injections. But Lilly may soon have to ward off an oral competitor to Trulicity from Novo ($NVO) in the GLP-1 subspace.

Lilly's Lundberg tried to downplay those concerns at a March health care conference: "So, of course, from a conceptual standpoint, it would be convenient for patients to have an oral application of a GLP-1, but I think it remains to be seen from the clinical efficacy, safety and, for the pricing perspective, cost of goods if it's viable or not."

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