Lilly enhances cancer drug pipeline through Scorpion acquisition

Eli Lilly, a prominent pharmaceutical company, has strategically partnered with Scorpion Therapeutics, a biotechnology startup, to bolster its cancer drug development pipeline. Announced recently, this collaboration involves Eli Lilly purchasing a promising experimental cancer therapy from Scorpion for a potential sum of $2.5 billion. As a unique aspect of this agreement, Scorpion will establish a new independent entity to manage its remaining assets and staff. While Lilly will own a minority share in this new company, Scorpion’s existing stakeholders, which include Atlas Venture, Vida Ventures, and Omega Funds, will maintain primary ownership. Adam Friedman, the current CEO of Scorpion, will lead the newly formed company alongside other startup executives.

The acquisition provides Lilly with a drug known as STX-678, designed to combat tumors that grow due to mutations in the PI3Ka gene. These mutations are among the most prevalent causes of cancer, impacting over 160,000 newly diagnosed individuals annually in the United States, particularly those with breast, gynecological, and head and neck cancers. Existing treatments such as Novartis’ Piqray and AstraZeneca’s Truqap, as well as various other drugs under development, also aim at these PI3Ka mutations. However, Scorpion has suggested that its drug might offer superior selectivity and potency compared to current PI3Ka inhibitors. Many existing therapies inhibit normal PI3Ka, posing tolerance challenges and struggling to access brain tissue—a common site for metastasis in solid tumors. Scorpion’s drug is believed to potentially overcome these hurdles and is being tested in a Phase 1/2 trial across multiple tumor types, including common forms of breast cancer. Additionally, Scorpion has been working with Pfizer to explore the use of STX-678 in conjunction with a CDK4 inhibitor. Lilly itself markets Verzenio, a medication that targets CDK4 in combination with a related protein.

This deal is a significant addition to Lilly's cancer drug division, an area where the company has heavily invested to complement its successful metabolic disease business. In 2019, Lilly acquired Loxo Oncology, subsequently engaging in further acquisitions to expand into precision oncology areas such as radiopharmaceuticals and antibody-drug conjugates. Verzenio, discovered and developed by Lilly, has become a leading drug in its category, although a substantial portion of Lilly’s revenue is sourced from diabetes and weight management products. Lilly is also developing its own PI3Ka inhibitor, currently in Phase 1 trials.

Lilly's agreement with Scorpion is reflective of a broader trend of increased mergers and acquisitions in the private biotech sector. This trend has emerged alongside a decline in the market for initial public offerings, pushing many mature startups to consider strategic alternatives. Scorpion Therapeutics, founded in 2020 by Gary Glick, successfully raised nearly $300 million in venture capital before Glick’s departure in 2021. Previously, Glick led other biotech ventures like Lycera, which secured a deal with Celgene, and IFM Therapeutics, which has spun off multiple companies acquired by Bristol Myers Squibb and Novartis. His latest venture, Odyssey Therapeutics, focuses on developing treatments for inflammatory conditions.