Eli Lilly & Co. will pay about $2.4 billion to acquire Dice Therapeutics Inc., a biotechnology company that is developing oral treatments for immune diseases.
(Bloomberg) — Eli Lilly & Co. will pay about $2.4 billion to acquire Dice Therapeutics Inc., a biotechnology company that is developing oral treatments for immune diseases.
Lilly agreed to pay $48 a share in cash for Dice, according to a statement Tuesday. That’s a 42% premium above the South San Francisco-based company’s closing share price on Friday. The transaction is expected to close in the third quarter.
Dice shares soared 38% to $46.64 shortly after markets opened at 9:57 a.m. in New York. Shares of Eli Lilly rose as much as 1.5%.
Big drugmakers have been shopping for biotech firms with immune therapies that can fill a variety of patient needs in conditions such as psoriasis. Merck & Co., among the companies most vulnerable to patent expirations as its blockbuster cancer treatment Keytruda ages, agreed to buy Prometheus Biosciences Inc. in April at a 75% premium.
The deal is part of a resurgence in biotech, where there have been 223 such acquisitions globally so far this year totaling $78 billion, more than double at the same time a year ago. That said, activity is nowhere near the heyday of 2019 when Bristol-Myers Squibb Co. bought rival drugmaker Celgene for $74 billion and Japanese drugmaker Takeda Pharmaceutical Co. bought Shire for $62 billion.
Health Deals
Healthcare deals overall are growing. So far this year there have been 1,181 deals in the industry totaling $143 billion, up 29% from a year ago.
Dice’s lead development program targets IL-17, an immune substance involved in a variety of inflammatory diseases. The market for injectable IL-17 drugs to treat psoriasis is expected to exceed $7 billion by 2026, according to Dice.
It’s focusing on developing experimental oral drugs called DC-806 and DC-853. Oral drugs are often preferred to injectable therapies, which can be expensive to make and store, and sometimes require complex administration.
“We believe the acquisition is a smart move,” Truist Securities analysts led by Robyn Karnauskas wrote Tuesday. “Various large pharma companies are looking at this space” of inflammation and immunology.
Lilly can likely afford to wait while those drugs develop, as its diabetes drug Mounjaro is aiming for approval in obesity, a market expected to reach some $100 billion at its peak. While Novo Nordisk A/S and Lilly are the leaders so far, companies like Pfizer Inc. and AstraZeneca Plc are also developing obesity drugs.
“It fits very well with what Lilly is doing in immunology and provides a potential oral solution to treating psoriasis when Lilly’s Taltz, which is an injectable, comes of patent in the late 2020s,” Bloomberg Intelligence analyst Sam Fazeli said.
–With assistance from Matthew Monks.
(Updates with market move in third paragraph and analyst comment in seventh.)
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