Pharma Focus Asia

Eli Lilly's Acquisition of Morphic Therapeutic Aims to Enhance Treatments for Inflammatory Bowel Disease (IBD)

Tuesday, July 09, 2024

Eli Lilly and Company (NYSE: LLY) has announced a definitive agreement to acquire Morphic Holding, Inc. (NASDAQ: MORF), a biopharmaceutical company specializing in oral integrin therapies for serious chronic diseases.

Morphic's primary focus is MORF-057, an oral small molecule inhibitor of α4β7 integrin designed to treat inflammatory bowel disease (IBD). Currently undergoing Phase 2 trials for ulcerative colitis and Crohn's disease, MORF-057 represents a potential advancement in treatment options for these conditions. Additionally, Morphic is developing a preclinical pipeline targeting autoimmune diseases, pulmonary hypertensive diseases, fibrotic diseases, and cancer.

Daniel Skovronsky, M.D., Ph.D., Lilly's Chief Scientific Officer and President of Lilly Research Laboratories, highlighted the potential of oral therapies for earlier disease intervention and the possibility of combination therapies for severe cases. He expressed enthusiasm for integrating Morphic's expertise into Lilly's efforts to develop innovative treatments in gastroenterology.

Morphic Therapeutic, emphasized the strategic alignment with Lilly, citing Lilly's substantial resources and dedication to inflammation and immunology. He praised MORF-057 as a promising example of their integrin technology platform, aimed at enhancing treatment efficacy and tolerability in IBD.

Under the terms of the agreement, Lilly will initiate a tender offer to acquire all outstanding shares of Morphic at $57 per share in cash, totaling approximately $3.2 billion. The transaction, expected to close in the third quarter of 2024, is subject to customary closing conditions and has received approval from both companies' boards of directors.

Financially, the purchase price represents a premium of around 79.0% to Morphic's closing stock price on July 5, 2024, and 87.2% to the 30-day volume-weighted average trading price prior to the announcement. Morphic's board of directors has recommended that stockholders tender their shares in the offer.

Citi is serving as Lilly's exclusive financial advisor, with Kirkland & Ellis LLP acting as legal counsel. Centerview Partners LLC is advising Morphic, alongside Evercore Group L.L.C., with legal counsel provided by Fenwick & West LLP.

Upon closing, Lilly will determine the accounting treatment of the acquisition according to Generally Accepted Accounting Principles (GAAP), impacting its financial results and guidance moving forward.



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