Eli Lilly, one of the world’s leading pharmaceutical companies, has seen its share price reach a record high after completing two strategic acquisitions that could boost its portfolio of diabetes and obesity treatments. The company announced on Monday that it had finalized the deals with Versanis Bio and Sigilon Therapeutics, which were first announced in June and July respectively. Together, the two acquisitions could have a total value of more than $2 billion, depending on the achievement of certain development and sales milestones.
Versanis Bio: A Potential Game-Changer for Obesity Treatment
Versanis Bio is a biotechnology company that focuses on developing novel therapies for metabolic diseases, such as obesity and type 2 diabetes. Its lead asset, bimagrumab, is a monoclonal antibody that targets a receptor involved in muscle growth and fat metabolism. Bimagrumab is currently in a Phase 2b clinical trial, testing its efficacy and safety in combination with Novo Nordisk’s Ozempic and Wegovy, two widely used drugs for diabetes and obesity.
According to Eli Lilly, bimagrumab has the potential to be a game-changer for obesity treatment, as it could offer significant weight loss benefits beyond what is currently available. The company expects to report the results of the Phase 2b trial in the first half of 2024. If successful, bimagrumab could enter Phase 3 development and eventually become a blockbuster drug in the multibillion-dollar obesity market.
Eli Lilly paid $375 million upfront to acquire Versanis Bio, and agreed to pay up to $1.55 billion more in future payments based on the achievement of certain regulatory and commercial milestones.
Sigilon Therapeutics: A Novel Approach to Type 1 Diabetes
Sigilon Therapeutics is a biotechnology company that specializes in developing cell-based therapies for chronic diseases, such as hemophilia, lysosomal diseases, and type 1 diabetes. Its proprietary platform, called Shielded Living Therapeutics (SLT), involves encapsulating engineered cells in a biocompatible material that protects them from immune rejection and allows them to secrete therapeutic proteins or hormones.
Sigilon has been collaborating with Eli Lilly since 2018 on developing an SLT product for type 1 diabetes, which is an autoimmune disease that destroys the insulin-producing cells in the pancreas. The SLT product, called SIG-001, consists of encapsulated cells that can produce insulin in response to glucose levels. SIG-001 is designed to restore insulin production and glucose control in patients with type 1 diabetes, without the need for immunosuppression or frequent injections.
Eli Lilly paid $14.92 per share to acquire Sigilon Therapeutics, which represents a 66% premium over its closing price on June 4, the day before the deal was announced. In addition, Sigilon shareholders received one non-tradeable contingent value right (CVR) per share, which could be worth another $111.64 in cash if certain regulatory and commercial milestones are met. The total value of the deal could reach up to $309.6 million, excluding shares held by Eli Lilly.
Eli Lilly’s Stock Performance and Outlook
Eli Lilly’s stock rose 1.8% on Monday to close at $276.77 per share, reaching an all-time high. The stock has gained nearly 50% year-to-date, outperforming the S&P 500 index and the healthcare sector. The company has been benefiting from strong sales of its existing products, such as Trulicity (diabetes), Taltz (psoriasis), Verzenio (breast cancer), and Emgality (migraine). It has also seen increased demand for its Covid-19 antibody treatment, bamlanivimab-etesevimab, which has received emergency use authorization from several countries.
Eli Lilly has also been investing heavily in research and development, expanding its pipeline of innovative drugs across various therapeutic areas. The company has several late-stage candidates that could drive future growth, such as tirzepatide (diabetes), donanemab (Alzheimer’s disease), mirikizumab (ulcerative colitis), lebrikizumab (atopic dermatitis), and pegilodecakin (pancreatic cancer).
With the completion of the two acquisitions, Eli Lilly has added more potential blockbusters to its pipeline, especially in the lucrative fields of diabetes and obesity. The company has also raised its full-year guidance for 2023, expecting revenue to range from $33.4 billion to $33.9 billion, and adjusted earnings per share to range from $9.70 to $9.90. Analysts have a bullish outlook on Eli Lilly’s stock, with an average price target of $293.67 and a consensus buy rating.