Dive Brief:

  • Eli Lilly, the Indiana-based drugmaker best known for diabetes and cancer research, said Friday that it plans to use a small company's genome editing technology to find new treatments for inherited diseases.
  • In exchange for an exclusive license to the technology, Lilly is paying $100 million up front and taking a $35 million equity investment in its owner, Precision Biosciences. Precision could also take home up to $420 million in future milestone payments, plus tiered royalties on any marketed therapies that come from the deal.
  • Precision will be responsible for researching the new treatments until they reach human testing, at which point Lilly would take over. The initial focus of the companies' work will be Duchenne muscular dystrophy, or DMD, as well as two other undisclosed gene targets. Lilly can pick up to three additional gene targets, too, per terms of the collaboration.

Dive Insight:

While DNA editing technology has been met with safety concerns and intense ethical debate, the potential to treat hundreds of diseases by cutting, inserting or muting genetic instructions has drawn significant interest from investors and pharmaceutical companies.

Editas Medicine, a pioneering biotech in CRISPR gene editing, raised nearly $100 million when it went public in early 2016. Intellia Therapeutics quickly followed, bringing in $108 million through its own initial public offering. Before the end of the year, another player, CRISPR Therapeutics, would secure $56 million from an IPO.

Large drug companies soon came calling. Allergan, now owned by AbbVie, inked a deal focused on eye diseases with Editas back in 2017. More recently, Regeneron and Vertex have expanded their respective collaborations with Intellia and CRISPR.

And while Editas, Intellia and CRISPR are the most advanced biotech developing CRISPR-based medicines, a wave of gene editing startups have followed, exploring new ways and new technologies to edit DNA. 

Now, Lilly's staking out a toehold in the fast-emerging sector. 

The company has long been known for its work in diabetes, but challenges on the commercial side pushed it to diversify. Lilly's made big investments in cancer, acquiring Loxo Oncology for $8 billion in 2019, and brought a couple immunology drugs to market over the last several years. The Precision Biosciences deal, though, thrusts Lilly to into one of the most cutting-edge areas of drug development.

Per their agreement, Precision will use its ARCUS technology platform, which alters DNA via a natural genome-editing enzyme, to develop potential in vivo treatments for genetic diseases. Precision will also be responsible for manufacturing these therapies before they enter human testing, which it plans to do through a 17,500-square-foot plant located in Durham, North Carolina.

One of the first diseases Lilly and Precision will attempt to treat is DMD. The illness has become a prime target for gene therapy, given it's caused by genetic abnormalities that leave the patients — mostly young boys — without a protein critical for muscle growth. Precision's plan is to use two enzymes to delete a certain segment in the gene which encodes that protein, with the hope of restoring its function.

In a presentation, Precision noted that animal testing has shown its technology holds promise in other diseases, such as hereditary transthyretin amyloidosis, familial hypercholesterolemia and autosomal dominant retinitis pigmentosa.

Precision called the Lilly deal a "transformative collaboration" for the company. Shares of the biotech were up 15% late Friday morning, to trade at roughly $11.20 apiece.

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