Lilly Strikes Licensing Deal With Rigel In Push Toward Neurological, Immunological Therapies

Eli Lilly And Co LLY announced a licensing deal Thursday with smaller biopharma Rigel Pharmaceuticals, Inc. RIGL that helps Lilly lock horns with the Sanofi SA (NASDAQ: SNY-Denali Therapeutics Inc (NASDAQ: DNLI) combo in combating neurological and inflammatory diseases.

What Happened: Lilly and Rigel entered into an exclusive licensing agreement and strategic collaboration to co-develop and commercialize the latter's lead compound R552 for all indications, including autoimmune and inflammatory diseases.

R552 is a receptor-interacting serine/threonine-protein kinase 1, or RIPK1 inhibitor. RIPK1 is a critical signaling protein that is found to cause a broad range of inflammatory cellular processes by causing cell rupture. The resultant dispersion of cell contents triggers an immune response and enhances inflammation.

Additionally, Lilly gets access to all of Rigel's brain-penetrating RIPK1 inhibitors for evaluation in central nervous system diseases.

R552, the companies noted, has completed Phase 1 clinical trials, and will begin Phase 2 trials in 2021, as part of the collaboration.

"RIPK1 inhibitors are a promising approach, and R552 is an exciting addition to our immunology pipeline. We look forward to working with Rigel to advance its clinical development," said Ajay Nirula, VP of immunology at Lilly.

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The Lilly, Rigel Deal Terms: For the licensing, Lilly is set to pay Rigel an upfront cash payment of $125 million, and up to $835 million in potential development, regulatory and commercial milestone payments.

Additionally, Rigel is eligible to receive tiered royalties ranging from the mid-single digits to high teens, depending on its clinical development investment.

Lilly will foot the bill for global commercialization for R552, while Lilly and Rigel will co-promote the compound in the U.S.

With respect to brain-penetrating RIPK1 inhibitors in CNS indications, Lilly will solely be responsible for all clinical development and commercialization.

Why it's Important: The deal will help Lilly deepen its neurological and immunological portfolio. In January, Lilly completed its acquisition of gene therapy company Prevail Therapeutics, which focuses on neurodegenerative disorders.

The deal brings compounds into Lilly's stable that are directed at the same target as those of Sanofi-Denali. Sanofi and Denali entered into a collaboration agreement in November 2018 for Denali's RIPK1 inhibitors that's valued at more than $1 billion. 

LLY, RIGL Price Action: Lilly shares were trading down 1.21% at $203.96 at last check Thursday, while Rigel shares were ripping 14.79% higher to $5.20. 

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