Lilly announced it would acquire Hypnion to get at its insomnia cures. A major question hangs over this deal: Why? You have to hand it to Sanofi -- Ambien (which I have written critically about in the past) has held on to its dominant market share (about 51% NRX for both brands). And it has done so despite extremely robust challenges from Sepracor's Lunesta (which has peaked at 11.6 % NRX ) and Takeda's Rozerem (2.6% NRX). If these brands can't break Sanofi's stranglehold on the category, what does Hypnion have that could make a difference?
Here's a couple of key facts from the Reuters coverage: " The drug works by targeting two chemical receptors -- 5HT2a and H1 -- that affect the ability to fall asleep and stay asleep." And: "Lilly is already developing a sleep drug called pruvanserin, which targets 5HT2a, and hopes the new product will complement that drug." Perhaps Lilly is considering combining the two compounds into one fantastic Mission Impossible-style knockout drop? Or perhaps Lilly feels it can bring both to market.
Another key fact: The dollar numbers on the deal were undisclosed. That just sounds funny to me.
Regardless, Lilly is now in a position of throwing money into a crowded category where there are already more than enough safe, reliable compounds, and where previous new entrants have experienced only modest success.
Investors: proceed with caution if this shows up as a significant event in Lilly's SEC filings.
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