Eli Lilly Pays $3.25 Million for 10% of La Jolla-Based Agouron

Eli Lilly & Co. has paid $3.25 million for 250,000 shares of common stock in Agouron, a small, La Jolla-based biomedical company that uses biology, chemistry and computer-simulation technology to develop new drugs. The purchase gave Lilly, an Indianapolis-based pharmaceutical giant, 10% of Agouron’s outstanding common stock.

Agouron will use the $3.25 million to fund research into its existing drug development programs, Agouron President and Chief Executive Peter Johnson said Thursday.

Agouron and Lilly also signed an agreement to work jointly toward the development of several undisclosed drugs, Johnson said. Agouron will use its expertise in “three-dimensional drug design” to uncover therapeutic drugs that Lilly will develop, manufacture and market, according to Johnson.

That agreement requires Lilly to provide multi-year funding for several new drug-design programs, Johnson said. However, neither company would describe how much funding Lilly will provide during coming years.

Lilly’s First Right

Lilly will have first right to manufacture and market products developed under the agreement with Agouron, Johnson said. Agouron will be “well-paid” by Lilly for any drugs that are manufactured in the future, Johnson said.

Lilly paid $13 a share for the 250,000 shares. Agouron closed up $1.25 at $12.25 on Thursday.

Agouron, founded in 1984, uses a blend of biology, chemistry and computer-simulation technology to design new drugs. Agouron’s research is focusing on new drugs to treat a wide variety of diseases.

The company reported a $1.3- million net loss for the six-month period ended Dec. 31, compared to a $178,900 net loss during the comparable period a year earlier. Agouron reported $345,200 in revenue for the period ended Dec. 31, 1987. It reported $263,000 in revenue for the like six-month period a year earlier.