Lilly to buy local biotech startup Avid

Avid Radiopharmaceuticals Inc., a local biotech start-up rooted in a doctoral student's desire to find an early diagnosis for Alzheimer's disease, is being purchased by Eli Lilly & Co. for an initial $300 million.

The deal calls for investors to receive an additional $500 million if certain commercial and regulatory milestones are reached, including Food and Drug Administration approval for Avid's groundbreaking diagnostic chemical, florbetapir F 18.

Florbetapir is a radioactive compound that binds with amyloid plaque, which is present in the brains of all Alzheimer's patients. If approved by the FDA, florbetapir will allow doctors to diagnose Alzheimer's in patients years before symptoms. The Cleveland Clinic predicted florbetapir would be the top medical innovation for 2011.

Lilly's purchase of Avid represents a significant endorsement of the work done by the small firm that spun out of research at the University of Pennsylvania in 2005 and still operates in West Philadelphia. For Lilly, an early investor in Avid, it is a step in its search for new products and revenue as it confronts the looming loss of patents on drugs that accounted for 74 percent of its sales last year.

"Lilly differentiates itself through innovation, and Alzheimer's is an area where Lilly has invested a lot," said Tiffany Olson, Lilly's vice president of diagnostics. "We feel this particular acquisition hits a number of key points for us: It is highly innovative, and it meets an unmet need."

Under the terms of the purchase agreement, Avid and its 53 employees will remain in Philadelphia. They are currently at 3700 Market St.

And the company will continue to be led by its current management team, including founder and chief executive officer Daniel Skovronsky, a 37-year-old Penn neuropathologist.

"This is very exciting," Skovronsky said of the sale. "It is validation of what we have achieved as a team at Avid."

Avid grew, in part, from Skovronsky's research as Penn doctoral student 10 years ago and his work as a neuropathologist.

"I was one of the people who would look at brain tissue under the microscope to diagnose Alzheimer's disease after people died," he said. "And we were really good at it, but it was not really helpful. It was too late for patients, their families and physicians."

Skovronsky collaborated with another Penn scientist, Hank Kung, who developed the technology needed to create a way to detect amyloid plaque with a PET scanner.

In July 2005, Skovronsky left Penn to become Avid Radiopharmaceuticals' first employee and its CEO. Kung joined him as Avid's chief scientific officer.

The company has been growing since.

Beyond its focus on Alzheimer's, Avid also is working on imaging compounds to help in the treatment of Parkinson's disease and diabetes.

Those products would prove a boon for Lilly as it tries to navigate perhaps the most challenging "patent cliff" facing any major pharmaceutical company. In the next seven years, it faces the expiration of patents on many of its leading drugs. Those include the schizophrenia drug Zyprexa, which goes off patent next year, and the antidepressant Cymbalta, which loses its patent protection in 2013.

Founded: In 2005 by Daniel Skovronsky, who is the chief executive

Headquarters: University City Science Center, Philadelphia

Business: Developing molecular imaging agents for early detection of Alzheimer's disease, Parkinson's disease, and diabetes

Employees: 53

Ownership: Privately held

Investors: Include Eli Lilly & Co., Pfizer Inc., Safeguard Scientifics Inc., and venture firms

Money raised from investors: $70 million

SOURCES: Avid, LillyEndText