Eli Lilly Deepens Its Oncology Offerings With an $8 Billion Acquisition of Loxo Oncology
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Eli Lilly and Company announced it was buying Loxo Oncology for $235 per share in cash, which comes to about $8 billion. The acquisition adds a lot of weight to Lilly’s oncology efforts.
Loxo’s Vitrakvi (larotrectinib) was recently approved by the U.S. Food and Drug Administration (FDA). It is an oral TRK inhibitor developed and commercialized in collaboration with Bayer. Its pipeline includes LOXO-292, an oral RET inhibitor being evaluated across multiple cancer types. It was recently granted Breakthrough Therapy status by the FDA.
In addition, Loxo has LOXO-305, an oral BTK inhibitor currently in Phase I/II. It is being evaluated in various B-cell leukemias and lymphomas. It also has LOXO-195, a follow-on TRK inhibitor also being studied by Loxo and Bayer.
“Using tailored medicines to target key tumor dependencies offers an increasingly robust approach to cancer treatment,” stated Daniel Skovronsky, Lilly’s chief scientific officer and president of Lilly Research Laboratories. “Loxo Oncology’s portfolio of RET, BTK and TRK inhibitors targeted specifically to patients with mutations or fusions in these genes, in combination with advanced diagnostics that allow us to know exactly which patients may benefit, creates new opportunities to improve the lives of people with advanced cancer.”
Under the terms of the deal, Lilly will acquire all outstanding Loxo shares for $235 in cash. It is expected to close by the end of this quarter. This amounts to a premium of about 68 percent on top of Loxo’s stock price as of January 4.
Loxo shares surged about 32.8 percent at the news before the close on Friday, but almost 64 percent in premarket trading, while Lilly’s dropped about 2.7 percent.
Lilly is better known for products such a Humalog for diabetes but has pushed harder into the oncology market in recent years. One of its best-selling cancer drugs is Alimta (pemetrexed) for nonsquamous metastatic non-small cell lung cancer (mNSCLC).
As 2019 enters its first full week, this is the second big biopharma deal. Last week, Bristol-Myers Squibb announced it was buying Celgene Corp. for about $74 billion, which will combine two of the world’s largest cancer drug companies. The combined companies will have nine products with more than $1 billion in annual sales each. The leading drugs are Opdivo, Revlimid, Pomalyst and Yervoy.
Loxo’s focus is on cancers caused by a single genetic mutation. For example, the drugs focused on a rare gene fusion mutation called RET, which is observed in thyroid, lung and other cancers.
In addition to Alimta, Lilly’s oncology portfolio includes Erbitux, for certain forms of colorectal cancer, and Cyramza for gastric cancer.
In May, Lilly announced it was acquiring Armo Biosciences for $1.6 billion in order to expand its portfolio of medications that help the body’s immune system battle cancer.
In November 2018, Lilly’s chief financial officer, Joshua Smiley, told Reuters it was looking for similar acquisitions, and it would use the $4 billion it gained as part of divesting Elanco, its animal health unit.
“We are gratified that Lilly has recognized our contributions to the field of precision medicine and are excited to see our pipeline benefit from the resources and global reach of the Lilly organization,” stated Josh Bilenker, Loxo’s chief executive officer. “Tumor genomic profiling is becoming standard-of-care, and it will be critical to continue innovating against new targets while anticipating mechanisms of resistance to available therapies, so that patients with advanced cancer have the chance to live longer and better lives.”