Selloff or Market Correction? Either Way, Here's What to Do NextSee Overvalued Stocks

Lilly beefs up bowel disease drug portfolio with $3.2 billion Morphic deal

Published 07/08/2024, 06:52 AM
Updated 07/08/2024, 10:42 AM
© Reuters. FILE PHOTO: Eli Lilly logo is shown on one of the company's offices in San Diego, California, U.S., September 17, 2020. REUTERS/Mike Blake/File Photo
LLY
-
MORF
-

By Sriparna Roy

(Reuters) -Eli Lilly agreed to buy Morphic Holding (NASDAQ:MORF) for $3.2 billion in cash, the companies said on Monday, beefing up its portfolio of inflammatory bowel disease (IBD) drugs and expanding its footprint in the multi-billion dollar market.

Shares of Waltham, Massachusetts-based Morphic surged nearly 75% to $55.62 in morning trading on Lilly's offer of $57 per share, which represents a 79% premium to the stock's last closing price.

Through the deal, Lilly will procure an experimental oral IBD treatment that offers patients a more convenient dosing option compared to other injectable therapies, including its IBD drug Omvoh that was approved last year.

Along with Lilly, other drugmakers such as Abbvie Inc, Pfizer (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ) are also jostling for a share of the bowel disease market.

IBD collectively refers to two conditions - Crohn's disease and ulcerative colitis- that are characterized by chronic inflammation of the gastrointestinal tract and are caused by abnormal reactions of the immune system.

Lilly counts its IBD drug, Omvoh, among its future growth drivers, besides its blockbuster weight loss treatment Zepbound and diabetes drug Mounjaro.

Morphic's lead drug MORF-057 is being tested in three mid-stage studies to treat two bowel conditions called ulcerative colitis and Crohn's disease.

Morphic is also developing other drugs, which are being tested in animals or test tube experiments, for autoimmune diseases, pulmonary hypertensive diseases, fibrotic diseases and cancer.

The companies expect the acquisition to close in the third quarter of 2024.

© Reuters. FILE PHOTO: Eli Lilly logo is shown on one of the company's offices in San Diego, California, U.S., September 17, 2020. REUTERS/Mike Blake/File Photo

The deal fits into Lilly's plans to diversify beyond obesity and adds to its string of recent "bolt-on" deals, said BMO analyst Evan Seigerman, referring to acquisitions below the $10 billion range.

The Morphic deal comes after a spate of acquisitions by Lilly last year such as its $2.4 billion buyout of Dice Therapeutics and $1.4 billion agreement for Point Biopharma Global.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.