Eli Lilly Is Among the Crowded Field Pursuing RNA Therapies
Eli Lilly Is Among the Crowded Field Pursuing RNA Therapies
(Bloomberg) -- Eli Lilly & Co. has its eyes on expanding in the technology that has helped turn the tide in the coronavirus pandemic, with a new finance chief who has deep roots in the company building on a strategy years in the making.
Like many other companies that watched as a new breed of vaccines helped provide millions of people around the world with strong protection against the ravages of severe Covid-19, Lilly is interested in RNA technology. But it is also wary of overpaying for assets in a market where other investors have been pouring in cash in hopes of latching on to the next big thing.
Bloomberg spoke with Anat Ashkenazi, Lilly’s new chief financial officer, as part of a series of interviews with dealmakers in the drug industry around the JP Morgan Healthcare Conference. The discussion has been edited for clarity and length.
Bloomberg: What was your vision when you were appointed to the role last February?
A: The answer is probably different than what you typically see when a CFO takes the job. I’ve been with the company for 20 years and my previous role was chief strategy officer. People ask, are you setting a new strategy? No, I’ve set the strategy. I was the one setting the strategy for a number of years. So when I stepped in, not much changed in terms of priorities and strategy. And I like that because it demonstrates consistency.
But I’m a different person from my predecessor. It’s a different style of management, a different approach. And that’s okay. Some people have to adjust to that. I’m very direct in my approach in part because I grew up in Israel, so it’s a very different culture.
Bloomberg: How would you describe Lilly’s strategy for dealmaking?
A: Our strategy has always been to develop a robust internal innovation engine not just for assets, but also for skillset and expertise. So even when you bring an asset in from the outside, we find an opportunity to add value, to bring our know-how, expertise and research to move the asset a little faster. We look at those as a way to supplement our portfolio, augment what we already have in our four core therapeutic areas, as well as the new modalities.
Bloomberg: What opportunities excite you?
A: RNA technology is something we started looking at a few years ago. We always said we’re focused on our core therapeutic areas, but then the question becomes, as for any pharma company: How do you not miss the next big thing? We wanted to make sure, years ago, we had a sensing capability. How do you figure out what are new or emerging technologies that will reshape drug development? We started a “white space” project looking at new technologies, and RNAs came out of that.
We have a full team that’s dedicated to new modalities in this space. And they have the remit to look at what potential opportunities are out there in terms of bringing things in house, but also in parallel developing the capabilities internally. So you’ll see both external innovation in that space, but also building out the organization in house by bringing in talent.
Bloomberg: How do you prepare internally for external deals, especially given the volatility of biotech prices?
A: We do it from a cashflow management perspective. How much can we allocate is based on that when deciding how much to put to business development, how much will go to share purchases, et cetera, it’s a general number. We will be above that number or below that number, depending on the opportunities we have in front of us. We’ve never limited ourselves just by a number we had on the books.
We’ve done two large deals for Lilly in the past 20 years, with ImClone Systems Inc. and Loxo Oncology Inc. Those are more rare. It’s hard to find something of this magnitude with the value that we want. If anything is going to limit us, it’s not our ability to invest, it’s just what the opportunities are out there. And we’re not going to compromise.
Bloomberg: How does all the money flooding into the space affect your ability to strike deals?
A: We don’t want to overpay, but I also recognize there’s been some inflation of the business development transactions. We want to find science that’s innovative and has the opportunity for breakthroughs. My preference has always been to the earlier stage deals, as opposed to later stage deals. We’re fortunate given the success we’ve had with our commercial portfolio, that we don’t need to buy revenue, so to speak. That’s not our focus.
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