Eli Lilly has signed up another drug development partner in India, having inked a cardiovascular research pact with Zydus Cadila.

Under the terms of the six-year deal, Zydus will be responsible for the drug discovery and development process up to Phase II and Lilly will have an option to license any promising molecules that emerge from the colloboration. Cashwise, the Ahmedabad-headquartered company could bank up to $300 million in milestone payments plus royalties.

William Chin, vice president of discovery research and clinical investigation at Lilly, said that Zydus has “unique capabilities to discover and advance these candidates” and “we are excited to explore this innovative drug discovery and development model with them".

Lilly already has partnerships with other Indian drugmakers. Last October it set up a 50:50 joint venture in India with the country’s Jubilant Organosys to provide drug development services to the companies' partnered molecules in the oncology, metabolic disorders, cardiovascular and diabetes fields. The US major also has alliances in place with Nicholas Piramal and Suven Life Sciences.

Schizophrenia drug flops in Phase II
Less good news for Lilly came after the firm presented “inconclusive” Phase II results from a study of its investigational schizophrenia treatment LY2140023. The data on the drug, a mGlu2/3 receptor agonist, was presented at the International Congress on Schizophrenia Research in San Diego, USA.

Lilly said that in the Study HBBI, neither LY2140023, nor the comparator drug, the firm’s blockbuster Zyprexa (olanzapine), separated from placebo. In fact, the company observed “a greater-than-expected placebo response, which was approximately double that historically seen in schizophrenia clinical trials”.

The news is a big blow to Lilly, given the excitement surrounding LY2140023. It has been touted as a new class of schizophrenia drug as it targets glutamate-mediated neurotransmission. All current antipsychotics act on dopamine receptors, and that mode of action is thought to be responsible for unpleasant extrapyramidal side effects such as involuntary movement.

Lilly is not giving up on the compound and said it plans an additional Phase II trial, Study HBBM, which if positive, would validate earlier proof-of-concept results. Steven Paul, president at Lilly Research Laboratories, stated that the firm remains optimistic that “the novel mechanism of compounds with the ability to reduce glutamate hyperactivity…will someday represent the next generation of breakthrough treatments for schizophrenia”.

Lilly to hit the acquisition trail?
However analysts are concerned about the failure of this trial and fear that Lilly's pipeline is not strong enough to compensate for drugs that will be going off-patent in the next few years, most importantly Zyprexa. An acquisition could provide a solution and chief executive John Lechleiter has told the Wall Street Journal that deals in the region of $15 billion could appeal.

In an earlier interview, with the Financial Times, Mr Lechleiter said the company is not interested in a mega-merger, and he ruled out a linked-up with Bristol-Myers Squibb. “I think we are seeing deals that are really driven more by weakness than what I would describe as strong strategic combinations,” he told the FT. “That will improve short-term problems but fail to answer the long-term question of research productivity.”