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Lilly wagers $135M on a startup’s plan to stop neurodegeneration

Eli Lilly has reached a deal to acquire Disarm Therapeutics, a biotech startup developing treatments for neurological diseases.Lilly will pay $135 million upfront for the Cambridge, Massachusetts-based biotech, and could shell out another $1.2 billion in milestone payments, though that additional cash isn’t guaranteed. The acquisition gives Lilly rights to an early portfolio of experimental medicines meant to prevent the degeneration of axons, the thin tails of nerve cells that send out electrical impulses. None of the drugs are in human testing yet.The deal is a bet by Lilly on a startup trying to prove that devastating neurological conditions like multiple sclerosis can be treated by protecting axons. Lilly aims to test the theory in conditions like MS, amyotrophic lateral sclerosis and peripheral neuropathy.

Many debilitating neurodegenerative diseases remain a biological mystery for drug developers. Lilly has seen this first hand, having watched a once-promising Alzheimer’s drug called solanezumab fall short in multiple large, lengthy studies.

But the need for new brain drugs remains significant, which is why, despite one setback after another, large pharmaceutical companies keep close watch on therapies that have a chance to slow or halt the progressive march of neurodgenerative conditions. Often, that means making targeted bets on emerging startups, through which cutting-edge academic research gains enough traction and funding from venture investors to advance.

Such is the case with Lilly’s deal for Disarm, a startup formed by biotech venture firm Atlas Venture. Disarm is based on research out of Washington University in St. Louis suggesting that an enzyme known as SARM1 is implicated in the destruction of axons in a variety of situations, among them certain neurodegenerative diseases.

It’s long been known that axons — which help nerve cells communicate with one another — waste away in various neurological diseases. In March 2017, Washington researchers Jeffrey Milbrandt and Aaron DiAntonio published a paper in the journal Neuron naming SARM1 as a potentially central culprit. SARM1 is inactive in healthy neurons, they found, but in disease, injury or stress the enzyme awakens and kicks off a cascade of events that destroys axons, which in turn causes sensory, motor and cognitive problems. Disarm was formed to develop drugs meant to block SARM1 and stop that from happening.

Disarm has been planning to advance candidates for MS, ALS, glaucoma and peripheral neuropathies, and presented encouraging preclinical results at a medical meeting last year. Lilly mentioned all but Disarm’s glaucoma research in its announcement to acquire the company.

AbbVie’s venture arm participated in the startup’s $30 million Series A round in 2017.