Eli Lilly on Monday announced a $3.2 billion all-cash deal to purchase Morphic and its pipeline of oral integrin therapies in a move to expand the pharma’s presence in the autoimmune diseases space.
Eli Lilly announced on Monday that it is acquiring Massachusetts-based biotech Morphic Holding for approximately $3.2 billion in cash. The deal will allow the pharma to expand its immunology portfolio and further establish itself as a player in the autoimmune diseases market.
Under the terms of the purchase, Lilly will pay $57 per outstanding share of Morphic, which represents a 79% premium to the biotech’s closing price on Friday. In response to the acquisition announcement Morphic surged around 77% in premarket trading on Monday, according to SeekingAlpha.
The boards of directors of both companies have signed off on the transaction. The deal is expected to be completed in the third quarter of 2024, subject to regulatory and antitrust clearances and other customary closing conditions, including the tender of a majority of the outstanding shares of Morphic’s common stock.
At the center of the acquisition is Morphic’s lead candidate MORF-057, a small molecule inhibitor of the α4β7 integrin that is currently being developed for inflammatory bowel diseases (IBD). According to the biotech’s website, this mechanism of action “substantially” reduces the movement of lymphocytes from the bloodstream to the intestines, avoiding the underlying inflammatory mechanisms at the root of IBD.
Morphic is currently running two Phase II studies of MORF-057 in ulcerative colitis (UC), and one mid-stage trial in Crohn’s disease.
BMO Capital Markets analysts in a Monday note to investors said the Morphic acquisition complements Lilly’s existing efforts in UC and Crohn’s. “The company continues to take strategic shots with smaller bolt-on acquisitions,” the analysts wrote. “Today’s deal to acquire Morphic is no exception to this trend and is logical given Lilly’s interest in developing and expanding its existing Immunology and Inflammation business (I&I) business.”
Morphic CEO Praveen Tipirneni in a statement touted the “immense potential of MORF-057 to benefit patients suffering from IBD,” which an “ideal strategic partner” could help realize. “Lilly brings unparalleled resources and commitment to the inflammation and immunology field,” Tipirneni said.
The acquisition will also give Lilly access to Morphic’s diverse portfolio of investigational oral integrin therapies—though all its other assets are still in preclinical testing. The biotech is also working on next-generation α4β7 inhibitors for other gastrointestinal indications, such as eosinophilic gastrointestinal disease and pouchitis.
Morphic’s development pipeline also includes therapies for cancers and pulmonary hypertensive diseases.
For Lilly, the Morphic acquisition represents its first biotech buy of 2024, following its buying spree last year. In June 2023, the pharma snapped up DICE Therapeutics for $2.4 billion, gaining access to its proprietary platform for small-molecule drugs that disrupt protein-protein interactions. The following month, Lilly bought Versanis for $1.93 billion, and then in October 2023 dropped $1.4 billion to acquire Point Biopharma.
Lilly has also seen several major business developments in recent months, including the FDA’s approval of its Alzheimer’s disease therapy Kisunla (donanemab) last week and its Phase III win for Zepbound last month, which strengthens its case for a label expansion in obstructive sleep apnea.
