>Cadila Healthcare (SHAREKHAN)

Cadila enters into drug developmental deal with Eli Lily

Zydus Cadila (Zydus) has signed a new collaborative drug discovery and development deal with US-based Eli Lilly to develop drugs focusing on the area of cardiovascular diseases. As per its earlier deals with Piramal Healthcare, Jubilant Organosys and Suven Life sciences, Eli Lilly has adopted a similar approach and will pay Zydus for finding new drug candidates and taking them to mid-stage trials, at which point Eli Lilly will have the option to step in and licence the most promising therapies.

· About the deal

Zydus will work to discover and develop potential molecules against a novel target, primarily in the cardio-vascular research space. Zydus will initiate the drug discovery and identify the potential drugs. It will also conduct animal trials (ie pre-clinical trials) on the potential drugs and take them up to mid-stage human trials (ie Phase-II Human Proof-of-Concept). Eli Lily will provide chemical starting points as well as expertise and feedback regarding clinical and regulatory aspects as needed to potentially increase the probability of success of the programme. The collaborative research programme may continue for a span of up to six years.

As part of the agreement, Eli Lily will have the option to licence any promising molecule at different stages. Under the deal, Zydus could receive up to $300 million in potential milestone payments and royalties from sales upon successful launch of any compounds derived from the research programme.

· Cadila to reap in cash flow benefits in long term

Although the deal would fructify in the longer term (as currently Zydus would incur all the expenses for the research), yet this alliance seeks to increase productivity in drug discovery and development by synergising the unique strengths of both the companies.

· A win-win situation for Zydus and Eli Lily

This deal reinforces our thrust on Zydus’ research and development (R&D) capabilities as the company will get access to world-class expertise of Eli Lily besides regulatory .

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