Lilly Marks Major Milestone for Mirror Portfolio with Agreement by Independent Fund to License First Two Investigational Medicines

INDIANAPOLIS, Feb. 15, 2011 /PRNewswire/ — Eli Lilly and Company (NYSE: LLY)
announced today that the Mirror Portfolio, a concept created by Lilly to access
innovation being developed outside the company’s walls, has achieved a
significant milestone. One of the independent venture capital firms
participating in the Mirror Portfolio has acquired two molecules and will
oversee the next stage of their development. The first is a molecule developed
pre-clinically by researchers at a major academic institution that is being
studied as a potential treatment for congestive heart failure; the second
molecule was developed by Lilly and is being studied for its potential in bone
healing and cancer.

Through the Mirror Portfolio, virtual companies financed by independent
investment funds will acquire molecules, manage the financing and determine the
scope, manner of execution and particular organization that will conduct the
research for early-stage molecules from approximately one year before testing in
humans to clinical proof-of-concept, at which point they will be offered for
sale to biopharmaceutical companies such as Lilly. In the case of the molecule
licensed from the academic institution as well as the molecule licensed from
Lilly, Chorus, Lilly’s lean virtual development organization, will conduct the
studies at the companies’ direction.

“The licensing of these molecules by the independent funds is an important
milestone for the Mirror Portfolio. Working with venture capital to make the
concept of the Mirror Portfolio a reality is one way Lilly is ‘innovating on
innovation’ as we strive to support the development of new medicines for the
benefit of patients around the world,” said Robert W. Armstrong, vice president,
global external research and development, Eli Lilly and Company. “Another
benefit of the Mirror Portfolio is that it provides access to capital, capacity,
capability and deep disease expertise that can be focused on developing
molecules generated in research institutions or biotechnology companies, with
the potential for rights to successful molecules to be purchased by Lilly.”

Unique R&D Approaches for the Benefit of Patients

Lilly is committed to researching, developing and acquiring innovative new
medicines to improve outcomes for individual patients. Achieving this goal
requires implementing new strategies to speed the delivery of new medicines to
patients. Two examples of Lilly’s unique approach are participation in the
Mirror Portfolio and Lilly’s Chorus drug development groups.

A key element in executing the Mirror Portfolio is the establishment of
investment funds. Lilly has committed to invest up to 20 percent of the capital
for these funds, or a total commitment of up to $150 million. In addition to
financial resources, Lilly will offer to out-license molecules to these funds.
For its investments of time and capital, Lilly will receive preferential access
to molecules managed by the funds. Lilly retains the rights to purchase all
molecules licensed from Lilly via the Mirror Portfolio, as well as to evaluate
and acquire a limited number of externally sourced compounds, all at fair market
value.

Established in 2002, Chorus is a small, multidisciplinary drug development group
within Lilly which conducts early-stage development work using a virtual model.
The Chorus group focuses on designing and efficiently executing lean and highly
focused development plans that progress compounds from candidate selection to
clinical proof-of-concept in human clinical trials. Using this approach, Chorus
has been able to reach decisions about 12 months earlier and at about half the
cost of the current industry model. To date, Chorus has delivered data on 17
molecules, six of which resulted in positive proof-of-concept clinical data. Due
in part to its successful track record and the increased demand for capacity
related to the Mirror Portfolio opportunities, Lilly has “cloned” the original
Chorus (now known as Chorus Premier) with the establishment of Chorus Resonance
in Indianapolis, Chorus Europe in the United Kingdom and Vanthys, a joint
venture in India. Lilly will make these drug development groups available to the
funds as a fee-for-service offering, although other alternative drug development
organizations may be used.

“Lilly’s establishment of the Mirror Portfolio supports our innovation strategy
which consists of three key components–molecule uniqueness, speed and cost
efficiencies–which together are the cornerstone of our research and development
philosophy,” said Jan M. Lundberg, Ph.D., executive vice president of science
and technology, Eli Lilly and Company, and president, Lilly Research
Laboratories. “Seeing the Mirror Portfolio now in action with the entry of these
first molecules gives us great confidence in our ability to leverage innovation
beyond our walls in order to deliver truly breakthrough medicines for the
patients who are waiting.”

About Lilly

Lilly, a leading innovation-driven corporation, is developing a growing
portfolio of pharmaceutical products by applying the latest research from its
own worldwide laboratories and from collaborations with eminent scientific
organizations. Headquartered in Indianapolis, Ind., Lilly provides answers -
through medicines and information – for some of the world’s most urgent medical
needs. Additional information about Lilly is available at www.lilly.com.

P-LLY

This press release contains forward-looking statements about the Mirror
Portfolio, Chorus and investigational compounds for the treatment of congestive
heart failure and for bone healing and cancer, and reflects the company’s
current beliefs. However, there is no guarantee that the Mirror Portfolio will
successfully develop these compounds or that the company will recognize the
benefits anticipated from its participation in the Mirror Portfolio, including
the acquisition of rights to any molecule. There is also no guarantee that the
company’s Chorus drug development group will continue to provide expected
research and development efficiency or will be successful in its undertakings
for the Mirror Portfolio funds. As with any pharmaceutical product under
development, there are substantial risks and uncertainties in the process of
development and regulatory review. There is no guarantee that these compounds
will receive regulatory approval, or that the regulatory approval will be for
the indications anticipated by the company or that these compounds will prove to
be commercially successful. For further discussion of these and other risks and
uncertainties, see Lilly’s filings with the United States Securities and
Exchange Commission. Lilly undertakes no duty to update forward-looking
statements.