Making a Billion Dollar Pharma Deal Happen
Eli Lilly & Company and Evox Therapeutics recently took Inova behind the scenes of their billion-dollar exosome deal.
Lilly had recognized the advanced exosome technology that Evox had developed as best in class. These exosomes have the capacity to deliver treatments beyond the blood-brain barrier and Lilly, who always put the science first, were keen to partner with the biotech to explore potential neuroscience therapies.
In a deep and wide-ranging discussion, Lilly VP Corporate Business Development Raymond Jordt and Evox VP Business Development Simon Dew explained how their teams worked over the course of two years to close the $1.2 billion deal despite some real challenges along the way.
Two Types of Challenges for Eli Lilly
Raymond Jordt explained that, for Lilly, there were really two types of challenges faced in closing the Evox deal.
“I would put them into two buckets,” he said. “One I would call traditional challenges that are, more or less, experienced with any transaction, and then I think there were a few that were unique to this one.”
Amongst the traditional challenges he described were the financial terms where the parties needed to deliver a balance between the value of Evox’s investment in their technology and Lilly’s assessment of risk and potential return. He also mentioned intellectual property and the need to balance Lilly’s need for longer-term patent protection against Evox’s need to do additional deals with competing pharma firms interested in the exosome platform. The scope of the collaboration, too, was a challenge faced by the partners, too, but one that was also commonly encountered in deals of this type.
On the unique challenge front, Jordt highlighted the loss of a key executive sponsor during the deal-making process. While potentially problematic, other Lilly executives were able to step in immediately and continue with the sponsorship. Additionally, he explained that midway through the negotiation he needed to devote significant time to Lilly’s $1.1 billion acquisition of Dermira. The need to devote significant time to the Dermira acquisition and being unable to communicate to Evox the reason why his priorities had temporarily shifted had real potential to disrupt the Lilly-Evox deal as communication with the biotech became less frequent.
Evox: Firm on Finance and IP
Simon Dew agreed with his pharma company peer on the challenge of the financial terms, noting that in any deal this is always a point of negotiation.
“It’s fair to say,” he explained, “that this was pretty tough at the beginning. This is a pre-clinical platform at this point, but we believed in the potential of the exosome space, we believed there was a value for that, and we had had some discussions with other companies, so we looked at benchmarks for that. We were pretty firm in what we wanted.”
Another key inflection point for Evox was intellectual property. The IP supports the platform which in turn supports the whole proposition of exosomes as a therapeutic, Dew told Inova, so Evox was clear on what they needed to keep in any partnership deal.
“We got there but it wasn’t easy,” he said, “it was a good, lengthy discussion.”
Both Lilly and Evox also recognized the impact that COVID-19 had on the negotiation of their deal. While it did impact the capacity of the teams to meet face-to-face, the trust and communication built up in the period since the companies first met in 2018 helped them conclude their ten-figure deal via virtual meetings.
Inova Helps Power Pharma Deals
Eli Lilly and Evox Therapeutics are Inova clients and both Jordt and Dew spoke of the way in which the software solution had contributed to closing their deal.
“We use Inova in a couple of different dimensions,” said the Lilly VP. “We are tracking companies, we’re tracking their assets, all the conversations we have, the deal conversations, management presentations – all of that.”
He went on to explain that Inova also serves an important role even when a deal does not progress. Where a deal falls through or where more data is required, Inova serves as a repository for what was documented by the biotech, what gaps existed in their technology, and months or years later that information remains available to the Lilly team.
“We use it throughout the entire process,” he said. “Everything from recording assets, our triage, due diligence, our deal discussions…we use it in an active sense and as a repository throughout that entire deal process.”
Evox, too, found value in Inova’s software solution, particularly as a means of capturing the history of their partnering process. However, their use of the Inova platform was not limited to the deal itself.
“The other thing we use Inova for is post-deal,” he said. “We use it for recording the transaction, the transaction history, we link it in with some of our finance elements there, too. It’s really a way to keep track of things going forward, as well, and I know the legal team uses it extensively for a whole bunch of legal documentation, too.”
Watch the Webinar Replay
The video replay of Raymond Jordt and Simon Dew’s behind-the-scenes glimpse into their $1.2 billion deal is available on the Inova website – click here to access the recording, including the spirited Q&A session with the live audience of biopharma and life science players.
This article was originally published by Nicolas Jouven on LinkedIn.
As I’m writing this, we’ve just closed the COVID-19 Virtual Partnering Event. The final meeting...Read more