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Eli Lilly (LLY) to Buy Morphic for $3.2B, Boost IBD Presence
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Eli Lilly and Company (LLY - Free Report) announced a definitive agreement to acquire Waltham, MA-based small biotech Morphic Therapeutics (MORF - Free Report) for approximately $3.2 billion. The acquisition will expand Lilly’s pipeline in immunology, a core area for the company, by adding Morphic’s oral integrin therapies for treating serious chronic diseases.
Morphic's lead pipeline candidate is MORF-057, an oral α4β7 inhibitor with the potential to improve outcomes in treating inflammatory bowel disease (IBD). The integrin, α4β7, has been clinically validated as a target for the treatment of IBD, which includes two conditions — Crohn's disease (“CD") and ulcerative colitis (“UC”). MORF-057 is being evaluated in two phase II studies in UC and one phase II study in CD. Morphic also has preclinical candidates in its pipeline for treating autoimmune diseases, pulmonary hypertensive diseases, fibrotic diseases and cancer.
Lilly will purchase all outstanding shares of Morphic for $57 per share in cash. The transaction has been approved by the boards of directors of both companies and is expected to close in the third quarter of 2022.
Morphic's stock was up 75% on Monday in response to the news. Lilly’s stock was up less than 1%.
Eli Lilly’s stock has risen 57.5% year to date compared with an increase of 21.5% for the industry.
Image Source: Zacks Investment Research
The acquisition will expand Lilly’s presence in the IBD market. A new IBD drug in its portfolio is Omvoh, which was approved for treating UC in 2023. Lilly has filed regulatory applications in the United States and Europe seeking approval for Omvoh for its second IBD indication, CD.
In recent years, there has been a surge in the prevalence of IBD conditions, CD and UC, both characterized by chronic inflammation in the gastrointestinal tract.
There has been a rapid increase in cases of CD and UC due to genetic factors, environmental factors and lifestyle changes. In addition, immune system irregularities, higher diagnosis rates, increased focus on early diagnosis and favorable reimbursement policies in developed countries are driving demand for IBD treatments.
Several big drugmakers are developing new medicines to treat UC and CD with novel mechanisms of action to help patients achieve long-term clinical remission. Like Lilly, other large drugmakers are acquiring smaller biotechs, making IBD candidates with improved clinical profiles.
In May, AbbVie (ABBV - Free Report) closed its previously announced acquisition of Landos Biopharma, which added Landos’ lead pipeline candidate, NX-13, a first-in-class, oral NLRX1 agonist in phase II development for the treatment of UC. In June, AbbVie in-licensed exclusive global rights to develop and commercialize FG-M701, a next-generation TL1A antibody for the treatment of IBD indications from the Chinese biotech FutureGen Biopharmaceutical. In the same month, it also acquired Celsius Therapeutics, a private biotech making novel therapies for IBD diseases.
In December 2023, Roche acquired Telavant Holdings from Roivant, which held the rights to RVT-3101, a promising new therapy in development for IBD conditions. For the deal, Roche made an upfront payment of approximately $7.1 billion to Roivant. Telavant Holdings was a Roivant company owned by Roivant Sciences and Pfizer.
In June 2023, Merck (MRK - Free Report) acquired the small biotech Prometheus Biosciences, which added tulisokibart/MK-7240 to its pipeline. Merck is developing MK-7240, a novel TL1A inhibitor, for the treatment of UC, CD and other autoimmune conditions.
Image: Bigstock
Eli Lilly (LLY) to Buy Morphic for $3.2B, Boost IBD Presence
Eli Lilly and Company (LLY - Free Report) announced a definitive agreement to acquire Waltham, MA-based small biotech Morphic Therapeutics (MORF - Free Report) for approximately $3.2 billion. The acquisition will expand Lilly’s pipeline in immunology, a core area for the company, by adding Morphic’s oral integrin therapies for treating serious chronic diseases.
Morphic's lead pipeline candidate is MORF-057, an oral α4β7 inhibitor with the potential to improve outcomes in treating inflammatory bowel disease (IBD). The integrin, α4β7, has been clinically validated as a target for the treatment of IBD, which includes two conditions — Crohn's disease (“CD") and ulcerative colitis (“UC”). MORF-057 is being evaluated in two phase II studies in UC and one phase II study in CD. Morphic also has preclinical candidates in its pipeline for treating autoimmune diseases, pulmonary hypertensive diseases, fibrotic diseases and cancer.
Lilly will purchase all outstanding shares of Morphic for $57 per share in cash. The transaction has been approved by the boards of directors of both companies and is expected to close in the third quarter of 2022.
Morphic's stock was up 75% on Monday in response to the news. Lilly’s stock was up less than 1%.
Eli Lilly’s stock has risen 57.5% year to date compared with an increase of 21.5% for the industry.
Image Source: Zacks Investment Research
The acquisition will expand Lilly’s presence in the IBD market. A new IBD drug in its portfolio is Omvoh, which was approved for treating UC in 2023. Lilly has filed regulatory applications in the United States and Europe seeking approval for Omvoh for its second IBD indication, CD.
In recent years, there has been a surge in the prevalence of IBD conditions, CD and UC, both characterized by chronic inflammation in the gastrointestinal tract.
There has been a rapid increase in cases of CD and UC due to genetic factors, environmental factors and lifestyle changes. In addition, immune system irregularities, higher diagnosis rates, increased focus on early diagnosis and favorable reimbursement policies in developed countries are driving demand for IBD treatments.
Several big drugmakers are developing new medicines to treat UC and CD with novel mechanisms of action to help patients achieve long-term clinical remission. Like Lilly, other large drugmakers are acquiring smaller biotechs, making IBD candidates with improved clinical profiles.
In May, AbbVie (ABBV - Free Report) closed its previously announced acquisition of Landos Biopharma, which added Landos’ lead pipeline candidate, NX-13, a first-in-class, oral NLRX1 agonist in phase II development for the treatment of UC. In June, AbbVie in-licensed exclusive global rights to develop and commercialize FG-M701, a next-generation TL1A antibody for the treatment of IBD indications from the Chinese biotech FutureGen Biopharmaceutical. In the same month, it also acquired Celsius Therapeutics, a private biotech making novel therapies for IBD diseases.
In December 2023, Roche acquired Telavant Holdings from Roivant, which held the rights to RVT-3101, a promising new therapy in development for IBD conditions. For the deal, Roche made an upfront payment of approximately $7.1 billion to Roivant. Telavant Holdings was a Roivant company owned by Roivant Sciences and Pfizer.
In June 2023, Merck (MRK - Free Report) acquired the small biotech Prometheus Biosciences, which added tulisokibart/MK-7240 to its pipeline. Merck is developing MK-7240, a novel TL1A inhibitor, for the treatment of UC, CD and other autoimmune conditions.
Eli Lilly currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.