If we only regard the landing point of Lilly BD as "seeking external cooperation projects", we will miss its core value and ignore the challenges that the industry will eventually face together.

At present, ExploR&D is trying to solve a more fundamental difficulty: how can large pharmaceutical companies grasp cutting-edge technologies when early innovation becomes earlier, more complex, and more expensive, and how can biotechnology startups find a stable path to value realization?

This issue has not only arisen recently. Over the past decade, it has been overshadowed by other surface factors.

The failure rate of research and development is increasing, the target validation cycle is lengthening, and the patience of capital for "story based innovation" is significantly decreasing. However, the number of innovative projects that can truly enter the system of large pharmaceutical companies has not increased proportionally. On the contrary, an increasing number of potentially important scientific explorations are stuck in the stages of 'insufficient data', 'unclear paths', and' too high risks'.

Hopkins described that in the traditional paradigm, the relationship between MNCs and Biotech is highly binary: either buy or not buy; Either enter the BD process or return to 'wait for data'.

This model can still operate around 2010 because at that time, the focus of innovation was still on relatively mature targets, clear mechanisms of action, and predictable engineering paths. Whether it is small molecules or early antibodies, failures are more due to execution issues rather than directional judgments.

But today, innovation has moved forward as a whole.

A large number of potential projects are stuck in the position where the targets have not been fully validated, the mechanisms are still in the hypothesis stage, the CMC pathway is unclear, and there is no standard answer for clinical design. Here, Biotech needs support the most, while MNCs are most accustomed to refusing.

Traditional pharmaceutical external cooperation is like a switch, with the vast majority of time stuck in 'No'. Hopkins believes that this is not a matter of attitude, but rather a result of organizational structure.

The BD and evaluation system of large pharmaceutical companies are essentially designed for "tradable assets" rather than "unformed scientific problems". When science is only a direction and a possibility, it is naturally not suitable to be included in the due diligence list.

The problem is precisely that more and more truly important innovations are happening at this stage. Lilly did not choose to avoid this contradiction, but hoped to resolve it positively.

Looking at the development of Lilly, ExploR&D is the result of a long-term path that gradually evolved - its predecessor was the research and development department Chorus, which was established in 2002.

The Chorus project is an experiment aimed at exploring how large pharmaceutical companies can operate like biotechnology companies in the early stages of research and development, while fully recognizing that the needs of the early stages of research and development are vastly different from those of the later stages. ”Hopkins added.

At first, Chorus focused on internal candidate drugs, but after years of operation, Lilly discovered that this model was highly suitable for external collaboration.

A representative case is Lilly's first concept validation of the molecule of the migraine drug Emgality, which was approved in 2018. This new drug was discovered by internal scientists at Eli Lilly. In 2011, Eli Lilly authorized it to Arteaus Therapeutics. In 2014, based on good Phase II clinical results, Eli Lilly repurchased all development rights of the asset.

In 2019, Lilly's acquisition of Loxo Oncology for approximately $8 billion was a noteworthy milestone.

Although Loxo had just obtained its first commercial product Vitrakvi at the time, it was clear that Eli Lilly was still interested in the biotech's ongoing pipeline, such as LOXO-292. In an interview, David Ricks, CEO of Eli Lilly, stated that LOXO-292, which targets RET mutations, is the main factor driving this transaction.

According to external evaluation, this transaction marks that Lilly is expanding from its traditional diabetes treatment field to cancer treatment. One of its strengths is the Chorus department, which targets early-stage assets.

Subsequently, the occurrence of COVID subjected Lilly's R&D system to an extreme stress test. In 2020, Eli Lilly introduced neutralizing antibody JS016 from Junshi Bio. Two months earlier, Junshi Bio and the Institute of Microbiology of the Chinese Academy of Sciences jointly launched the research and development of this project.

The results of this collaboration were immediate. In 2021, Eli Lilly announced that the combination therapy of JS016 and its neutralizing antibody bamlanivimab has been granted emergency use authorization by the FDA.

Whether it is the rapid advancement of the neutralizing antibody project or the completion of clinical and regulatory interactions in a very short period of time, these have made Lilly internally reconsider one thing: when organizations are willing to take risks for scientific hypotheses, many aspects that are considered "must be slow" can actually be restructured.

With Chorus upgrading to ExploR&D, this R&D model allows Lilly to keep up with the cutting-edge scientific advancements in the pharmaceutical industry while also investing in start-up biotech.

Hopkins revealed that the ExploR&D team has a "satisfactory exponential growth curve", and by the end of 2025, Eli Lilly has signed over 90 cooperation agreements with more than 65 biotechnology companies.

Overall, there are not many large pharmaceutical companies in the industry that talk about "share risk", but most of them remain at the level of economic structure, such as reducing down payments, delaying milestones, and increasing the proportion of backend revenue sharing.

These designs are certainly important, but they mainly address the allocation of financial risks, rather than the fundamental cause of R&D failure.

Hopkins stated that ExploR&D's understanding of "shared risk" is reflected in who participates in key decisions at what times.

The most desirable time for Lilly to intervene is before the partner makes a mistake. For example, whether the target selection is reasonable, whether the CMC pathway is realistic, whether the CDMO selection matches future scale, and whether the clinical endpoints truly have regulatory and commercial significance. These seemingly technical decisions often determine the fate of a company for the next three to five years.

There are no shortage of negative examples here. Hopkins mentioned a gene therapy company whose science itself was not a problem, but they initially accepted immature CMC advice and chose the wrong CDMO. As a result, most of the funds were consumed at non critical nodes, and the project came to a halt.

This type of failure often occurs in the industry, but it is almost never reflected as a "lack of correct cooperation methods in the early days".

Our philosophy is to work hand in hand with our partners based on their actual situations, "Hopkins said. The support that ExploR&D can provide is flexible - from consulting with founders, to helping partner companies build multifunctional teams, to driving operations from self discovery stages to clinical concept validation, Lilly can cover all aspects.

For example, in 2024, Eli Lilly signed three strategic agreements with AI pharmaceutical company Insitro.

Insitro has developed two siRNA molecules and attempted to use them for the treatment of diseases including metabolic dysfunction related fatty liver disease. However, these siRNA molecules require delivery vectors to reach the liver.

In the first two agreements, Lilly provided Insitro with the option to obtain a license for GalNAc (N-acetylglucosamine) delivery technology, allowing it to achieve liver delivery of drugs. In the third agreement, Insitro and Eli Lilly will collaborate to discover and develop antibodies targeting a third new target for metabolic diseases.

The biotechnology industry is facing severe challenges, with tight funding, rising costs, and increased complexity, "Hopkins further explained." Why would a company with strong capabilities in the field of discovery science have to build Lilly from scratch and spend 150 years with the hard work of 10000 R&D professionals day after day? If this scale can be applied to the innovation ecosystem, it will bring huge advantages

It is worth noting that at present, ExploR&D has expanded another unique element, which is a series of strategic agreements signed with hundreds of suppliers. For example, in 2024, CDMO star company Cambrex announced a partnership with ExploR&D to rapidly advance early small molecule drugs into the clinical stage.

According to Hopkins' estimation, the biotechnology companies collaborating with Eli Lilly can directly save three to six months of time through this network.

Returning to the perspective of Biotech in China and reviewing Lilly's ExplorR&D, it will be found that what it brings is not only "an additional cooperation opportunity", but also quietly changing the position of local innovation companies in the global system.

The problem is that in order to seize the dividends, it depends on whether Chinese biotech truly understands the trade-offs behind this logic.

Firstly, ExploR&D is not "supporting Chinese biotech". The starting point of Lilly has always been its own long-term innovation efficiency. As a result, it has raised higher demands on Chinese biotechnology.

Whether it is Xinda Biotechnology, which recently reached its seventh strategic cooperation, or Shengyin Biotechnology, Laikai Pharmaceutical, or Eli Lilly's chosen partners in the past two years, they are not simply "project-based companies", but pharmaceutical companies that have formed clear advantages in a certain type of technology platform or disease understanding.

An investor told Tongyi that the BD with Xinda Biotechnology in February was equivalent to "spending 350 million (USD down payment) to build an R&D group". Lilly can choose different biotechnologies to combine, but partnering with Xinda Biotech is "the most convenient and easy to manage".

In other words, ExploR&D does not solve the problem of 'insufficient abilities', it only amplifies' existing abilities'. If a Chinese biotech still heavily relies on external guidance in scientific judgment, research and development organization, or execution path, even if it enters into cooperation, it is difficult to truly obtain structural benefits from it.

Secondly, the biggest challenge of this model for Chinese biotech is not in research and development itself, but in decision-making transparency and strategic awareness.

ExploR&D values early participation in key decision-making, which means that Chinese companies need to clarify their boundaries at a very early stage: which aspects can be relinquished and which must be persisted in.

This is not entirely consistent with the growth path of some Chinese biotech companies. For a long time, the local biotechnology industry has been accustomed to "pushing out projects first and then seeing who is willing to take over", and many strategic choices have been passively formed under multiple pressures from capital, partners, and market environment. The intervention method of ExploR&D precisely requires the founding team to provide a relatively clear direction judgment when the data is not yet sufficient.

That's also why Hopkins repeatedly emphasizes that they prefer potential partners to come with "problems" rather than "assets" - problems mean thinking about the path, and assets are often just a result display.

Finally, on a more practical level, this model has a less frequently discussed but very important impact on Chinese biotech: it is reshaping the criteria for determining when to sell and when to keep.

Under traditional logic, Chinese biotech often faces a choice between early authorization for cash flow and certainty, or insisting on independent promotion and bearing extremely high financing and execution risks. ExploR&D provides a possibility that lies between the two: introducing the system capabilities of large pharmaceutical companies without fully transferring asset control, and jointly achieving key milestones.

At the same time, this path also requires local biotech companies to have longer financial patience and higher organizational maturity.

It is obvious that local innovation has been increasingly valued by overseas companies, and Chinese assets are being endorsed by the rising transaction amount. The continued prosperity of going abroad from 2025 to the present is evident.

However, not all pharmaceutical companies can reach the other shore in this wave of vast soup. Only when one's own abilities are clear enough and the boundaries are clear enough, cooperation models like ExploR&D will become a new engine for the leapfrog development of biotechnology.