Lilly rushed its Loxo deal to have a big reveal at JPM



Dive Brief:

  • Eli Lilly pushed for a speedy acquisition of Loxo Oncology so it could announce the deal at this year’s J.P. Morgan Healthcare Conference, a document filed Thursday by Loxo with the Securities and Exchange Commission revealed.
  • The deal, which became public on the conference’s opening day of Jan. 7, has Lilly paying $235 per Loxo share for a total valuation of $8 billion. Lilly initially offered $230 per share on Dec. 20, but Loxo’s board of directors determined that price point was too low.
  • Lilly representatives wanted to «expeditiously» complete due diligence and execute a transaction to meet the JPM timeframe, according to Loxo. Deal talks began and concluded in about a two-week window. Notably, Lilly was the only company to put up a bid for Loxo, which at the time was having trouble locking down a licensing agreement for its most advanced candidate, LOXO-292.

Dive Insight:

Loxo is Lilly’s biggest oncology investment in more than a decade.

Yet newly available details of the deal suggest that while Lilly was interested in the biotech’s drugs and business, it also cared deeply about making a splash at JPM.

Indeed, Lilly’s move sent ripples through the biotech landscape — namely for companies that, like Loxo, are investigating targeted therapies. Shares of Agios Pharmaceuticals, Blueprint Medicines and Clovis Oncology, among others, ticked up following news of Loxo’s takeout.

«Today’s acquisition marks the third deal for targeted oncology companies since the beginning of December, and we believe the resurgence in M&A is likely to benefit the other later development-stage and early-commercial stage companies in our coverage universe,» Leerink analyst Andrew Berens wrote in a Jan. 7 note.

Lilly’s cash offer of $235 per share was a 68% premium to Loxo’s closing share price on Jan. 4. In exchange, the big pharma is taking home a recently approved TRK inhibitor, Vitrakvi (larotrectinib), and a handful of clinical and preclinical assets.

One of those assets is LOXO-292, a RET-targeting cancer therapy that showed strong efficacy in early-stage testing. Loxo had actually been trying to find a licensing partner for LOXO-292 for about eight months when deal talks with Lilly first began. The biotech reached out to more than 15 companies about potential licensing, but proposed terms were never attractive enough for Loxo.

Investment bank Raymond James forecasts nearly $500 million in annual sales for LOXO-292 by 2023.

Such revenue bumps should help Lilly, which has been working to develop a stronger presence in oncology. In 2018 alone the company inked cancer-focused deals with Armo BioSciences and AurKa Pharma and brought on a well-known cancer researcher to lead its immuno-oncology medical development team.

Representatives from Eli Lilly and Loxo did not respond to BioPharma Dive requests for comment.




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