Eli Lilly
on Tuesday morning flexed the M&A muscles that come with having the highest valuation in the history of the pharmaceutical industry. Lilly placed a risky bet on a biotech that’s just weeks away from announcing the results of a closely watched trial of its most important medicine.
Lilly (ticker: LLY) said it would pay $12.50 per share for
Point Biopharma Global
(PNT), nearly double Monday’s closing price of $6.69. The purchase price totals $1.4 billion.
The deal is a demonstration of Lilly’s heft, which has swelled substantially in recent months, amid investor excitement over its obesity drugs. The company now has a market value of over $500 billion, and Lilly shares are up 47.1% so far this year while other pharmaceutical companies have trailed the market.
Point develops radioligand therapies, which use radioactive atoms to precisely target cancers. It’s an area that has seen significant advancements in recent years, but not one where Lilly has been active. Nevertheless, the company on Tuesday swept in to take a significant, risky bet.
Point is expected to announce data before the end of the year on a Phase 3 trial of its lead drug, known as PNT2002, in prostate cancer patients. The highly anticipated results had been seen as a key test for the company. Investors had been waiting to see how PNT2002’s performance in the Phase 3 trial compares to the performance of a similar
Novartis
(NVS) drug called Pluvicto, which will also have new data soon.
Analysts had been bullish on PNT2002’s odds, but in notes on Tuesday, wrote that the price fairly accounts for the trial’s likely success.
“While some may question the deal timing, we note that the deal price of $12.50/share represents approximately the upper end of where we predicted PNT stock could trade in the best-case scenario” after the PNT2002 and the
Novartis
data is announced, Leerink Partners analyst Faisal Khurshid wrote in a Tuesday morning note.
Point shares are up 84.3% in the premarket hours on Tuesday, while Lilly stock is flat.
The deal is the latest in what’s become a steady drumbeat of acquisitions for Lilly, which has seen excitement over the transformative potential of its weight loss medicines send its market value over $500 billion this year. The company has announced deals in recent months to buy Dice Therapeutics for $2.4 billion, Sigilon Therapeutics for up to $309.6 million, and Versanis Bio for up to $1.9 billion, among others.
Though its obesity medicines have garnered the most attention, Lilly is also preparing to launch an Alzheimer’s therapy called donanemab, and sells a long list of other drugs. On Monday, Lilly said that the Food and Drug Administration had rejected its application for approval of an eczema drug called lebrikizumab, citing an inspection of a facility of a contract manufacturer that makes the drug substance used in lebrikizumab.
In a note on Tuesday, Jefferies analyst Andrew Tsai wrote that Lilly’s deal for Point signals growing interest in radiopharmaceuticals. “We think the deal value is mostly fair for both parties” based exclusively on PN2002, but that the company also has a pipeline, manufacturing capacity, and other assets that could “generate upside over time.” Tsai rates Point stock at Buy with a $14 target price; he doesn’t cover Lilly.
In a statement, Lilly said it was excited about Point’s approach.
“We are excited by the potential of this emerging modality and see the acquisition of Point as the beginning of our investment in developing multiple meaningful radioligand medicines for hard-to-treat cancers, as we have done in small molecule and biologic oncology drug discovery and development,” said Jacob Van Naarden, president of Lilly’s oncology unit.
The transaction has been approved by the boards of both companies and is expected to close by the end of 2023.
Write to Angela Palumbo at [email protected] and Josh Nathan-Kazis at [email protected]
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