Just over a month after being announced, Eli Lilly (NYSE: LLY) have closed an agreement to acquire 100% of Morphic’s stock (NASDAQ: MORF) for $3.2bn. This deal saw Eli Lilly submit a tender offer of $57 per share, representing a 79% premium to July 5th's closing price and an 87.2% premium to the 30-day volume weighted average trading price. Centerview Partners and Evercore acted as financial advisors for Morphic while Citigroup represented the bidder on the buy-side.
Morphic, a biopharmaceutical firm which specialises in developing a portfolio of integrin therapies to treat those with inflammatory bowel disease (IBD), will help reinforce Eli Lilly’s commitment to developing new medicines in the field of gastroenterology. Their current lead program is a selective oral small molecule inhibitor of α4β7 integrin for the treatment of IBD. According to Eli Lilly’s Chief Scientific Officer, Daniel Skovronsky, oral therapies could open up new possibilities for earlier intervention in diseases. In addition, Morphic is also developing a preclinical pipeline of other molecules for the treatment of those who suffer from autoimmune diseases, pulmonary hypertensive diseases, fibrotic diseases and cancer. Eli Lilly’s plans to expand into the IBD market follows in the footsteps of recent similar deals, such as AbbVie’s acquisitions of Landos Biopharma and Celsius Therapeutics.
Estimated at a current size of roughly $20.74bn, the IBD market is projected to grow at a moderate CAGR of 3.8% from 2024-2030. A rise in Crohn’s disease and ulcerative colitis have been the main driving forces behind the growth of the IBD market. The increase in the 2 conditions has been largely attributed to genetic factors, environmental factors and lifestyle changes. It is estimated that 721 out of 100,000 Americans are diagnosed with IBD and that over 10 million people live with the condition worldwide. To combat the disease, an increased number of trials are being run as hospitals partner with pharmaceutical companies to develop and test new treatments. Current methods focus on reduction in 3 areas: inflammation, complications and long-term remissions.
Innovation is a defining characteristic of the IBD industry as novel therapeutic drugs such as biologics and JAK inhibitors are being rolled out. Firms in this space are also starting to harness artificial intelligence (AI) capabilities to treat those with Crohn’s disease and ulcerative colitis. An example of such would be Insilico Medicine designing an investigational IBD drug candidate called ISM5411 with the aid of generative AI.
Overall, Eli Lilly’s acquisition of Morphic highlights the growing strategic focus on the IBD market, driven by rising disease prevalence and the need for innovative therapies. With Morphic’s expertise in integrin therapies and a robust pipeline, this deal positions Eli Lilly well to capitalize on advancements in gastroenterology and related fields.
Written by: Ethan Lok
Sources: MergerLinks, Yahoo Finance, Eli Lilly, Grandview Research
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